Under the European Monetary System,a country's export prices
A)decreased if the inflation rate in that country increased.
B)could be controlled by loosening domestic monetary policy.
C)became more competitive as long as that country accelerated its domestic inflation and kept its foreign exchange rate with the deutsche mark stable.
D)none of the above.

Question

Quizplus · Accepted Answer

Under the European Monetary System, a country's export prices would not necessarily decrease if its inflation rate increased, nor could they be directly controlled by loosening domestic monetary policy. Additionally, accelerating domestic inflation while keeping the foreign exchange rate stable would not inherently make a country's exports more competitive, as it could lead to a loss of purchasing power and potential retaliatory measures by trading partners. Therefore, none of the provided options accurately describe the dynamics of export prices under the European Monetary System.

Under the European Monetary System,a Country's Export Prices