The Credibility Theory of the EMS Implies in Effect That

question 24

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.
• B) can restrain governments from depreciating their currency.
• 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) can control the political policies of member nations.

---

Definitions:

Decision Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Dominance Structuring

The organization of entities in a hierarchy where some have control or power over others.

Psychological Process

The mental functions and actions by which an individual perceives, thinks, feels, and behaves.