Chapter 27

Instructions

Choose your answers from a-d by clicking the radio button next to each choice and then press 'Submit' to get your score.

Question 1

When did economic and monetary union become an objective of the EC?

a) 1957

b) 1969

c) 1985

d) 1992

Question 2

What is meant by an 'economist' approach to monetary union?

a) Monetary union should only be attempted with a strict approach to monetary policy

b) Monetary union can be compatible with a wide range of fiscal policies

c) Monetary union should only be attempted after some convergence of economic policies is achieved

d) Monetary union should occur before convergence of economic policies

Question 3

What approach to monetary union did the 1970 Werner Committee propose?

a) A monetarist approach

b) An economist approach

c) A delay in monetary union

d) None of the above

Question 4

Why did the 'floating snake' not lead to monetary union after 1973?

a) Structural divergence in European economies

b) Pressure from a low US dollar

c) The high value of the Deutschmark

d) All of the above

Question 5

Which of the following was not a key element of the EMS?

a) An Exchange Rate Mechanism (ERM)

b) The European Currency Unit

c) The Deutschmark as an international reserve currency

d) The European Monetary Co-operation Fund

Question 6

What did the Delors report propose?

a) An end to exchange rate targets until member state economies had converged

b) Maintaining the EMS with wider bands of exchange rate fluctuation

c) Increasing convergence in economic policy, creation of the European Central Bank and the introduction of a single currency

d) None of the above

Question 7

In what ways were there asymmetries in the way the EMS operated?

a) Certain countries bore most of the exchange rate adjustment costs

b) Certain countries had more influence than others in the setting of interest rates

c) Both of the above

d) Neither of the above

Question 8

How did the French and German positions on monetary union differ?

a) Germany wanted a highly independent European Central Bank and strong monetary discipline

b) Germany wanted the European Central Bank to coordinate closely with national finance ministers

c) France preferred the name 'euro' for the new currency, while Germany preferred 'ecu'

d) France favoured a rigid application of the budget deficit limits

Question 9

What happened on 16 September 1992?

a) The member states agreed on the five convergence criteria for membership of the single currency

b) Britain joined the ERM of the EMS

c) The French and German governments reached a compromise on the ECB leader

d) The Pound Sterling was forced out of the ERM of the EMS

Question 10

Which of the following is not part of the convergence criteria?

a) Having no budget deficit for three years running

b) Maintaining a level of inflation not more than 1.5% above an agreed baseline

c) Maintaining interest rates not more than 2% above an agreed baseline

d) Maintaining exchange rates within the ERM band for two years

Oxford University Press, Online Resource Centre, Chapter 27.

Chapter 27

Instructions

Question 1

Question 2

Question 3

Question 4

Question 5

Question 6

Question 7

Question 8

Question 9

Question 10