E.U. Flashcards
what is the council of ministers
institution which decides on all major laws and policy changes, made up of ministers from each member state
what is the commission
institution that represents the interests of the EU as a whole and is responsible for ensuring that EU laws and policies are carried out, proposing or starting new legislation and measures
what is the European Parliament
751 members elected by the people in each member state, responsible for discussing and making recommendations about new laws
what is the court of justice of the European Community (ECJ)
supreme court of justice for cases that involve community law
how many members of the eurozone
19 of the 28 members of the European union
what is the European central bank (ECB)
central bank for Europe’s single currency
what are the functions of the ECB
keep inflation below (but close to) 2%
define and implement monetary policy
support economic policies of eurozone members
single market d
removal of obstacles, (such as customs checking) to allow the free movement of goods, services, capital and persons through the area
what are the benefits of the single market
economies of scale
dynamic efficiency (inefficient lose market share)
emergence of cheap airlines and electricity
reduction in export bureaucracy
freedom of travel
what are the costs of the single market
some domestic firms may be unable to compete
still work in progress (gaps in areas such as intellectual property rights)
services sector has opened up more slowly
trade deflection d
redirection of international trade due to the formation of a free trade area
what is a free trade area
members eliminate trade barriers between themselves but continue to operate barriers against non-members
trade creation d
an increase in international trade that results from the reduction in tariff barriers
can you show trade creation on a diagram
yes, the domestic demand and supply, price with tariff, and lower customs union price
what is trade diversion
when, after joining a union, a country has to buy goods from a higher cost producer inside the union due to the common external tariff
how do you show trade diversion on a diagram
domestic demand and supply, world price and higher EU price with tariff
what type of currency is the euro
free floating (sometimes managed)
what type of currency is sterling
free floating
what is the stability and growth pact
a pact that limits the pubic sector borrowing of participating countries to 3 % of GDP
what are the potential benefits of a single currency
reduced transaction costs reduced exchange rate uncertainty increased competition increased FDI lower interest rates (government failure less likely because of the ECB)
what are the potential costs of a single currency
loss of independent monetary policy
loss of sovereignty
what is the problem with the UK not having control over its monetary policy
ECB unlikely to attach same importance to unemployment (Phillips curve)
single policy by ECB might affect some countries more than others
too deflationary
what are the 5 tests that Britain would have to pass before joining the EMU
economic convergence (aligning business cycles)
flexibility to cope with economic shocks
investment in the UK
effect on the financial services industry
effect on UK employment and growth
