The Result of the Reunification of Eastern and Western Germany

question 87

Multiple Choice

The result of the reunification of eastern and western Germany in 1990

• A) was a boom in Germany and higher inflation, with no effect on nearby countries.
• B) was a recession in Germany and lower inflation, with no effect on nearby countries.
• C) was a boom in Germany and higher inflation, and, with other EMS countries' commitment to fixed exchange rates, a deep recession in nearby countries.
• D) was a recession in Germany and lower inflation, and, with other EMS countries' commitment to fixed exchange rates, a deep recession in nearby countries.
• E) was a recession in Germany and lower inflation, causing a boom in nearby countries.

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Definitions:

Exchange Rates

The value of one currency for the purpose of conversion to another, impacting international trade and investment.

Absolute Purchasing Power Parity

A hypothesis positing that when there are no transportation or transaction expenses, the same products in various nations ought to be priced equally if priced in the same currency.

Exchange Rate

The worth of one currency in relation to another for conversion purposes, specifying the amount of one currency that can be exchanged for another.