6. Stage Of Integration: Common approach to monetary policy, and often a single currency. Leads to Central Bank and harmonised fiscal policy. Simplifies trade (no changing of currency), reduces transaction costs, easier to predict future.
Monetary Union
Economic Union
Single Market
7. Stage Of Integration: No restrictions on movements of Labour & Capital, no Non-tariff Barriers (NTB). Often common policies such as employment law.
Single Market
Customs Union
Economic Union
8. For a depreciation of the currency to improve the balance of trade the sum of the price elasticities of demand (PEDs) for imports and exports must be greater than 1.
J-Curve Effect
Marshall-Lerner Condition
Thirwell's Law
9. An exchange rate calculated to take into account the inflation rates of the respective countries.
Pegged Exchange Rates
Real Exchange Rates
Nominal Exchange Rates
10. The account that records long-term flow of capital into and out of an economy. It records purchases and sales of assets and compoprises of long-term capital flows and short-term capital flows.
Budget
Capital Account
Current Account
11. Stage of Integration: Removal of tariffs & quotas but that is all. Causes "Trade Diversion"
Free Trade Area (FTA)
Tariff Removal
Single Market
12. Where economic integration results in trade switching from a low-cost supplier outside the economically integrated area to a less efficient source within the area.
Allocative Efficiency
Trade Diversion
Trade Creation
13. In a floating exchange rate system, when there is a rise in the value of the currency.
Increased Supply of a Currency
Appreciation of a Currency
Revaluation of a Currency
14. Investment made by multinational corporations or other foreign bodies in a country other than that in which the company is based.
Relocation
Foreign Direct Investment (FDI)
Aid
15. An exchange rate system where one currency's value is permanently set against another country's currency.
Managed Exchange Rates
Fixed Exchange Rates
Freely Floating Exchange Rates
16. Where economic integration results in high-cost domestic production being replaced by imports from a more efficient source within the economically integrated area.
Economies of Scale
Trade Creation
Trade Diversion
17. The record of economic and financial flows into and out of a country over a specific amount of time.
Balance of Payments
National Income
Capital Account
18. Stage Of Integration: Common external trade policy, usually common external tariffs. But within Europe Non-tariff barriers may still exist.
Monetary Union
Customs Union
Single Market
19. The net trade in goods and services which takes into account Income flows and Current transfers, funds from the EU and foreign aid also fall into this account. Made up of the Balance of Trade, the Investment Income Balance and the Tranfers Balance.
Current Account
Capital Account
Budget
20. The more inelastic your YED for imports, the higher the level of economic growth you can have whilst keeping your Balance of Payments in equilibrium.
