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:

Independent Variable

The factor in a study that the experimenter alters to see how it impacts the outcome variable.

Dependent Variable

A variable in an experiment or study whose changes depend on the manipulation of the independent variable.

Interaction Effect

A situation in statistical analysis where the effect of one independent variable on the dependent variable is different at different levels of another independent variable.

Main Effect

The effect of an independent variable on a dependent variable, isolated from other variables in an experimental study.