1)For a member country in the Eurozone, stabilisation of a positive inflation shock under the real interest rate channel implies contractionary fiscal policy is necessary.

True

False

2)According to the Maastricht Treaty of 1992

a.The European central bank is responsible for country specific shocks.

b.National governments are responsible for common shocks with different effects on each member

c.National labour and supply-side policies do not determine equilibrium unemployment.

d.The European central bank is not mandated with an inflation target for the Eurozone.

3)Assume the United States is the home country and the Eurozone is the foreign country. Which one of the following statements is the Most accurate?

a.A rise in the interest rate offered by dollar deposits causes the dollar to appreciate.

b.For a given euro interest rate and constant expected exchange rate, a rise in the interest rate offered by dollar deposits causes the dollar to appreciate.

c.A rise in the interest rate offered by dollar deposits does not affect the U.S. dollar.

d.A rise in the interest rate offered by the dollar causes the euro to appreciate.

e.A rise in the interest rate offered by dollar deposits causes the dollar to depreciate.