In the long run money is neutral. It has no lasting effect on __________ but does determine __________.

Select one:

a.the nominal economy, the real rate of exchange

b.the real economy, the rate of inflation and of appreciation/depreciation of the exchange rate

c.monetary policy, the rate of inflation and of appreciation/depreciation of the exchange rate

d.exchange rates, prices and wages.

The Maastricht Treaty specifies that the ECB's prime goal is to maintain price stability and the ECB clarified this by saying it means to keep inflation in the range of 3 per cent to 1 per cent over a 5 year horizon.

Select one:

a.True

b.False

The target interest rate for the ECB is the European Over-Night Index Average (EONIA), a weighted average of overnight lending transactions in the euro area's interbank market. The ECB controls this by:

Select one:

a.requiring Eurozone banks to charge the prime clients an interest rate that is no more than plus or minus 0.5 per cent from the target interest rate

b.establishing an 'interest rate ceiling' by offering to lend euros to banks at a fixed rate, and establishing a 'interest rate floor' by offering to borrow euros from banks at a fixed rate that is somewhat lower than the interest rate ceiling.

c.conducting weekly auctions for reserve deposits that provide liquidity to the banking system.

d.B and C

e.A and C