1. Which of the following statements regarding common law and civil law legal systems is INCORRECT?

- Codified principles are more important than cases in civil law countries

- Civil law countries tend to provide stronger investor protection

- European countries such as Italy are classified as civil law countries

2. Which of the following exchange rate arrangements allows government intervention with market forces to set exchange rates?

- Free float

- Currency substitution

- Managed float

3. Which of the following statements regarding fixed and flexible exchange rate regimes is INCORRECT?

- Fixed exchange rates reduce exchange rate uncertainty

- Flexible exchange rates enable easier external adjustments

- Fixed exchange rates insulate countries from inflation in other countries

4. Which of the following statements regarding European Monetary Union is INCORRECT?

- EMU promotes cross-border investments and mergers

- EMU enhances exchange rate policy independence

- EMU improves the liquidity of European financial markets