A Krone/euro Peg Alone Is

question 21

Multiple Choice

A krone/euro peg alone is

• A) not enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule.
• B) enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule.
• C) not enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule, provided fiscal policy will be used as well.
• D) enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule, provided the government runs a budget deficit.
• E) enough to provide partial stability in the face of smaller monetary shocks that shift the AA schedule.

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