Advocates of flexible exchange rates claim that under flexible exchange rates, a currency
A) appreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products.
B) depreciation caused by increasing the money supply would increase unemployment by lowering the relative price of domestic products.
C) depreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products.
D) depreciation caused by increasing the money supply would reduce unemployment by increasing the relative price of domestic products.
E) depreciation cause by decreasing the money supply would not effect unemployment, but would increase the relative price of domestic products.
Question 2 - The EU countries were prompted to seek closer coordination of monetary policies and greater exchange rate stability in order
A) to enhance Europe's role in the world monetary system.
B) to turn the European Union into a truly unified market.
C) both to enhance Europe's role in the world monetary system and to turn the European Union into a truly unified market.
D) both to turn the European Union into a truly unified market and to counter the rise of Japan in international financial markets.
E) to homogenize all European cultures.
Question 3 - The EMU created a currency area with more than
A) 200 million consumers.
B) 250 million consumers.
C) about a billion.
D) 500 million consumers.
E) 300 million consumers.
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