The Fiscal Shock in Germany Due to Reunification Caused the Bundesbank

question 33

Multiple Choice

The fiscal shock in Germany due to reunification caused the Bundesbank to pursue a monetary policy that:

• A) was appropriate for Britain, since it had experienced a similar shock.
• B) was appropriate for all the other ERM nations but not Britain.
• C) was appropriate only for Germany, since neither Britain nor other ERM nations experienced a similar shock.
• D) had poor timing, since the monetary action should have come before the reunification.

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Definitions:

Ethnocentric Thinking

The belief in the superiority of one's own ethnic group or culture, often accompanied by a dismissal or devaluation of other cultures.

Outgroup Members

Individuals who are perceived as not belonging to one's own group, often seen as different or separate from the in-group.

Reciprocity Norm

A social norm that dictates that individuals should return the favor or kindness that others have done for them.

Social Influence Technique

Strategies or methods used to change or influence the attitudes, behaviors, or perceptions of others through social interaction.