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      Question

      Read the passage below and determine which combination

      of the given statements can be correctly inferred from the text. Passage: The European Monetary System (EMS), established in 1979, created a framework of semi-fixed exchange rates anchored to the European Currency Unit (ECU), which itself was heavily weighted by the German deutsche mark. This arrangement successfully minimized currency volatility and fostered cross-border commerce across Western Europe but ultimately collapsed in the early 1990s due to divergent national economic policies and severe speculative attacks against weaker currencies. Its dismantling paved the way for the modern era of the Eurozone and the single currency. Nevertheless, the cooperative frameworks and monetary habits born under the EMS continue to deeply influence European Central Bank (ECB) policy and regional economic integration today. Statements: 1. The European Monetary System relied on a network of semi-fixed exchange rates tied to a benchmark currency unit backed heavily by the deutsche mark. 2. The EMS collapsed primarily because its mechanisms were highly effective at permanently eliminating speculative currency attacks. 3. Although the original exchange rate framework ended, the cooperative operational legacies of the EMS persist in modern regional governance.
      A Only 1 and 2 Correct Answer Incorrect Answer
      B Only 2 and 3 Correct Answer Incorrect Answer
      C Only 1 and 3 Correct Answer Incorrect Answer
      D All 1, 2, and 3 Correct Answer Incorrect Answer
      E Only 1 Correct Answer Incorrect Answer

      Solution

      Statement 1 can be inferred. The passage explicitly states that the EMS "created a framework of semi-fixed exchange rates anchored to the European Currency Unit (ECU), which itself was heavily weighted by the German deutsche mark." This mirrors the structural data provided in the text perfectly. Thus, Statement 1 is a valid inference. Statement 2 cannot be inferred. The text notes that the system collapsed "due to divergent national economic policies and severe speculative attacks." Claiming that it collapsed because it succeeded in eliminating these pressures is a direct contradiction and logical reversal of the text's explanation. Thus, Statement 2 is incorrect. Statement 3 can be inferred. The final line of the passage states that despite the system dismantling, "the cooperative frameworks and monetary habits born under the EMS continue to deeply influence European Central Bank (ECB) policy and regional economic integration today." This confirms that its institutional legacies are still active. Thus, Statement 3 is a valid inference. Therefore, because Statements 1 and 3 are factually supported by the text while Statement 2 is explicitly contradicted, C is the correct answer choice.

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