Development and Case Studies

Question 1

EU: What is the European Union?

Answer 1

A collection of countries in europe that pay membership dues, vote on laws they all must follow and have certain equal rights among countries. They share a central currency among EuroZone members.

Question 2

What are the requirements for the eurozone participation?

Answer 2

1. Inflation less than 1.5% higher than the avg of the lowerst members
2. Debt to gdp ratio less than 60%.
3. gov. deficit less than 3%.

Question 3

What are the Advantages of the euro currency?

Answer 3

• Facilitates price comparison of goods among countries
• Facilitates tourism as currency exchange d bypassed.
  -Salaries, savings and reforms are stable as the currency is stable.

Question 4

Disadvantages of the Euro currency?

Answer 4

• Information overload for consumer due to dual pricing
• High investments in ATMs, phones, parking meters, cash registers
• Dual accounting and the use of two different payment systems.
• Loss of ability to use exchange rate policies to increase international competitiveness.