Economics 2 Flashcards
What is my mnemonic for the types of laws/policies which are common for member states in the common market stage of economic integration and economic union stage as well.
‘CEPT (like someone shortening the word EXCEPT)
Competition policies
Employment policies
Product Laws
Taxation Policies
Define the term “balance of payments”.
The balance of payments is a summary of teh payments and receipts of transactions between a country and the rest of the world over a given period, usually one year.
Define the term “exchange rate”.
The exchange rate is the rate at which one currency can be exchanged for another country’s currency in the foreign exchange market.
What is a devaluation and what is a revaluation?
A devaluation is a downward movement in the domestic currency, making it cheaper on the foreign exchange market. A revaluation is an upward adjustment of the domestic currency, making the currency more expensive on the foreign exchange market.
What is a depreciation and what is an appreciation?
A depreciation of a currency is a fall in the external value of that currency due to changes in the forces of demand and/or supply. An appreciation of a currency is a rise in the external value of that currency due to changes in the forces of demand and/or supply.
What are the three accounts in the balance of payments for a country?
Capital Account
Current Account
Official Reserves Account
What is an FDI
An FDI (foreign direct investment) is a long-term investment in a country by an investor from abroad. The foreign investor sets up a firm or acquires a local company.
What are public and merit goods?
A public good is a good which is collectively consumed by society such as streetlights. A merit good is a good for which conmsumption of the good benefits society much more than any individual consumer (e.g. education).
What are externalities?
Externalities are spillover effects of production and consumption which affect a third party (indicate that the market is not operating efficiently).
What is the equation for allocative efficiency of a market?
P = MC
(Price or value society places on the last unit produced = Marginal Cost)
What is social welfare?
Goods and services offered by government to those who need these goods and services but cannot acquire them for themselves.
What is the money supply?
The money supply is the total stock of money in the economy at a given time. (The money supply is determined by the CB through monetary policy)
