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The Fiscal Shock in Germany Due to Reunification Caused the Bundesbank

Question 42

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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