Under ERM 2 rules, the national central bank of an EU member with its own currency can suspend euro intervention operations
A) if there is a civil war.
B) if they result in money supply changes that threaten to destabilize the domestic price level.
C) if there is a current account deficit.
D) if there is a current account surplus.
E) if they result in a weakened current account.
Question 2
If most of the shocks that buffet the economy come from the output market shocks, then
A) fixed exchange rates are better than flexible exchange rates.
B) flexible exchange rates are better than fixed exchange rates.
C) which system is chosen is not important.
D) fixed exchange rates are better than flexible exchange rates only in the short run.
E) flexible exchange rates are better than fixed exchange rates only in the short-run.
