Question

The Maastricht treaty is intended to move EU members to a:

A system of freely fluctuating currencies

B managed float

C system of totally fixed exchange rates

D return to the Gold Standard

Answer 1

B managed float

The Maastricht treaty is intended to move EU members to a managed float

The Maastricht treaty created a common economic and monetary union, with common currency Euro. This currency Euro was declared to be a common currency for the members and the main objective of the Euro was price stability ie. to safeguard the value of the Euro. In the managed float, the exchange rates would be determined by supply and demand, but a government may intervene at times to prevent a currency value extreme fluctuation.

A is incorrect as Euro was a common currency in the treaty

C is incorrect as Euro is not a fixed exchange rate regime

D is incorrect as the treaty laid the foundation of the Euro and was related to currency and not return to gold standards.