|
| 1 | Until the end of the nineteenth century money was metallic and a large number of currencies circulated side by side. |
 | A) | True |
| B) | False |
|
| 2 | The first two European monetary unions, the Latin Monetary Union and the Scandinavian Monetary union were not only built on harmonized coinage, but also had a common central bank with clear coordination of national monetary authorities. |
| A) | True |
| B) | False |
|
| 3 | Under Hume’s price-specie mechanism, a nation which purchases more imports than exports tends to accumulate gold. |
| A) | True |
| B) | False |
|
| 4 | One of the two main lessons learned from the period of floating exchange rates after collapse of the gold standard were that floating exchange rates cannot be manipulated. |
| A) | True |
| B) | False |
|
| 5 | The Bretton Woods System retained gold as the ultimate source of value but the only currency directly tied to gold was the US dollar. |
| A) | True |
| B) | False |
|
| 6 | After the demise of the Bretton Woods system, Continental Europe tried to build a regional exchange system, the snake. It failed due to a lack of clear rule and coherence. |
| A) | True |
| B) | False |
|
| 7 | The maximum possible fluctuation of non-dollar currencies vis-à-vis each other under the snake (last part) was: |
| A) | 1% |
| B) | 2.25% |
| C) | 9 % |
| D) | 15% |
|
| 8 | The ERM’s parity grid was ____ |
| A) | a flexible Exchange Rate arrangement between all EMS countries, with the Deutschmark as the anchor currency. |
| B) | a basket of currencies of all EMS countries. |
| C) | a matrix like table collecting all pair wise central parities and their associated margins of fluctuation. |
| D) | a totally symmetric exchange rate arrangement where all ERM currencies were fixed to each other with a flexible band of fluctuation of plus or minus 20%. |
|
| 9 | Within the Eurozone, when one country runs a balance of payments surplus, it receives __________ of euros. A deficit country can no longer use __________ to re-establish competitiveness. |
| A) | inflows, the exchange rate |
| B) | inflows, trade barriers |
| C) | outflow, the capital account |
| D) | outflow, wage adjustments |
|
| 10 | Under the Bretton Woods system all currencies were defined in terms of the dollar; exchange rates were ___________; and a new institution, the ___________, was created and this provided financial support and oversaw national policies. |
| A) | pegged to the value of gold, World Bank |
| B) | fixed, EMS |
| C) | fixed but adjustable, IMF |
| D) | aligned, WTO |
|
| 11 | The European Council Meeting set a precise schedule for the establishment of monetary union. |
|
| 12 | During the first ten years of the EMS, inflation rates diverged and realignments were chronic. To address this problem, European countries: |
| A) | pegged their currency to the DM, the largest member with the lowest rate of inflation. |
| B) | set a wide band of fluctuation within which currencies were to be aligned. |
| C) | pegged their currencies to the US$. |
| D) | abandoned the system and switched to floating rates. |
|
| 13 | Within the Eurozone, a country cannot change its exchange rate to re-establish the competitiveness of its exports. Adjustments have to work through: |
| A) | inflation and interest rates. |
| B) | prices and wages. |
| C) | interest rates and budget deficits. |
| D) | labour markets and interest rates. |
|
| 14 | The 1978 EMS agreement was explicitly symmetric, without any central currency. |
| A) | True |
| B) | False |
|
| 15 | The EMS-2 system is more flexible and less committal than EMS-1: the margins of fluctuation are less precisely defined and interventions, though still automatic and unlimited, may be suspended by the ECB. |
| A) | True |
| B) | False |
|
| 16 | The EMS agreement established two arrangements, the _________ to which all European Community countries were de facto members and the ________, an optional scheme. |
| A) | European Monetary Union (EMU), EMS-2 |
| B) | European Monetary System (EMS), Exchange Rate Mechanism (ERM) |
| C) | European Currency Unit (ECU), Exchange Rate Mechanism (ERM) |
| D) | EMS-2, European Currency Unit (ECU) |
|
| 17 | Because of _________ and chronic _________ for high inflation countries, all EMS members decided to adopt the _______ as an anchor and thus avoid further realignments |
| A) | high inflation, trade deficits, DM |
| B) | high unemployment, current account deficits, 'franc fort' |
| C) | high inflation, external deficits, 'franc fort' |
| D) | speculative crises, external deficits, DM |
|
| 18 | What precondition for joining the EMU is set by the Maastricht Treaty? |
| |
|
| 19 | The adoption of the euro in January 1999 was accompanied by the launch of which instrument? |
|
| 20 | In the period between the Maastricht Treaty and the coming into force of the EMU, Germany pushed for introducing the EMU for only a small number of Member States. |
| A) | True |
| B) | False |
|
| 21 | The 2010 debt crisis of the EMU led to at least five innovations that were decided with an unprecedented speed and decisiveness. Those were the creation of the Troijka, reduction of Greek debt, ___________, the new treaty to oversight national budgets and the decision to have the ECB to use indefinite resources to quiet down the panic on the financial markets. |
| A) | A political union |
| B) | A tax on financial transactions |
| C) | the banking union |
| D) | reduction of Portuguese, Spanish and Irish debt. |