Why Did Some Potential Eurozone Countries,such as Lithuania,choose to Maintain

question 49

Multiple Choice

Why did some potential eurozone countries,such as Lithuania,choose to maintain their peg with the euro while others,like Poland,chose to devalue during the eurozone crisis?

• A)Lithuania was smaller than Poland and more susceptible to German pressure.
• B)Lithuania traded more with the rest of Europe than Poland and so needed to maintain stable exchange rates.
• C)Lithuania was much more indebted than Poland,and a devaluation would have increased the cost of that debt.
• D)Lithuania had a right-wing government that preferred price stability,while Poland had a left-wing government that cared more about reducing unemployment.

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Definitions:

Commodity X

A placeholder name for a generic commodity or product in economic models or discussions.

Commodity Y

A generic placeholder term used to refer to any tradable item that satisfies wants or needs, but without specifying the item.

Marginal Rate of Substitution

The speed at which a consumer is prepared to exchange one product for a different one while keeping their level of satisfaction constant.

Snails

Slow-moving, gastropod mollusks with a spiral shell, some species of which are eaten as delicacy.