1. Which of the following is a TRUE statement with respect to the impact of the euro?

1. European firms product prices are more difficult to determine w.r.t. foreign currency costs
2. Interest rates across European countries differ more now than before there was a euro
3. Investing across European countries provides less diversification now than before the euro
4. Contagion is less likely now that the euro has been instituted

2. When a U.S. government intervenes in foreign currency markets while adjusting the money supply via buying or selling treasuries, they are conducting ___________.

1. Non-sterilized intervention
2. Sterilized intervention
3. Contagion
4. None of the above