In the Example of the Peg Between Britain and Germany

question 4

Multiple Choice

In the example of the peg between Britain and Germany, what would have been the case if Britain had allowed the pound to float and depreciate after Germany's GDP rise?

• A) Britain would have suffered depreciation and a recession.
• B) Britain would have had to raise interest rates.
• C) Britain would no longer be eligible to join the new euro currency.
• D) Britain could have lowered interest rates and enjoyed an added boost to GDP.

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Definitions:

War of 1812

The War of 1812 was a conflict fought between the United States and Britain over issues including trade restrictions and the impressment of American sailors, culminating in no significant territorial changes.

Status Quo

The existing state or condition of affairs at a particular time, often used in discussions about maintaining or changing current situations.

International Arbitration

A method of resolving disputes between parties from different countries outside the courts, typically by following specific rules in a neutral forum.

Treaty of Ghent

The peace treaty that ended the War of 1812 between the United States and the United Kingdom, signed on December 24, 1814.