Under the ERM, each country fixed ____________ against each other ERM participant. Collectively the
Group _________ against the rest of the world.
A) a nominal exchange rate, floated
B) a real exchange rate, pegged
C) a purchasing power parity, pegged
D) a real exchange rate, floated

Question

Quizplus · Accepted Answer

Under the European Exchange Rate Mechanism (ERM), each country fixed a nominal exchange rate against each other ERM participant, and collectively, the group floated against the rest of the world. This allowed for some stability within the group while allowing for adjustments based on broader global economic conditions.

Under the ERM, Each Country Fixed ____________ Against Each Other