6. 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.
Trade Diversion
Trade Creation
Allocative Efficiency
7. 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.
Marshall-Lerner Condition
Thirwell's Law
J-Curve Effect
8. Stage Of Integration: Centralising policies in some areas, usually through taxation.
Economic Union
Customs Union
Monetary Union
9. 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
10. 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
11. In a fixed exchange rate system, when the value of a currency goes up.
Improvement of Currency
Revaluation of a Currency
Apprectiation of a Currency
12. 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
13. In a fixed exchange rate system, when the value of a currency goes down.
Devaluation of a Currency
Depreciation of a Currency
Revision in Value
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. Where economic integration results in high-cost domestic production being replaced by imports from a more efficient source within the economically integrated area.
Trade Creation
Trade Diversion
Economies of Scale
16. 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
17. Stage Of Integration: Common external trade policy, usually common external tariffs. But within Europe Non-tariff barriers may still exist.
Customs Union
Single Market
Monetary Union
18. Price Disparities are narrowed, as trade within the FTA is encouraged.
Positive Integration
Negative Integration
Protectionism
19. 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
20. An exchange rate calculated to take into account the inflation rates of the respective countries.
