The Credibility Theory of the EMS Implies in Effect That

question 40

Multiple Choice

The credibility theory of the EMS implies in effect that the political costs of violating international exchange rate agreements

• A) cannot restrain governments from depreciating their currency to gain the short-term advantage of an economic boom at the long-term cost of higher inflation.
• B) can restrain governments from depreciating their currency to gain the short-term advantage of an economic boom at the long-term cost of higher inflation.
• C) cannot restrain governments from depreciating their currency in the short run.
• D) cannot restrain governments from depreciating their currency in the long run.
• E) cannot restrain governments from depreciating their currency to gain the long-term advantage of an economic boom.

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Definitions:

AGIL Typology

A theoretical framework proposed by Talcott Parsons that classifies systems’ functions into four categories: Adaptation, Goal attainment, Integration, and Latency.

Talcott Parson

An American sociologist known for his development of a general theoretical system for the analysis of society called structural functionalism.

Conflict Theory

A sociological perspective that views social and economic inequalities as the result of competing interests between different social groups, leading to conflict.

Social Equilibrium

A state of balance within a society, where social forces and elements are aligned in a way that maintains social order and minimizes conflict.