The fiscal shock in Germany due to reunification caused the Bundesbank to pursue a monetary policy that:
A) was appropriate for Britain, since it had experienced a similar shock.
B) was appropriate for all the other ERM nations but not Britain.
C) was appropriate only for Germany, since neither Britain nor other ERM nations experienced a similar shock.
D) had poor timing, since the monetary action should have come before the reunification.
Answer: C) was appropriate only for Germany, since neither Britain nor other ERM nations experienced a similar shock.
You might also like to view...
If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then
a. real rates were higher in 2001. b. real rates were higher in 1980. c. credit was more expensive in 1980. d. credit was cheaper in 2001 because the nominal rate was lower.
If a nation is selling more goods and services to foreigners than it is buying from them, then on net it must be buying assets abroad
a. True b. False Indicate whether the statement is true or false