| Why was the launch of the Euro not only an economic act but also a political act? | Because it was designed to help expand the international financial and political reach of the EU. |
| What is the Monetary Policy about of the European Union? | A policy concerned with money supply, the value of a currency, the control of inflation and the setting of interest rates. |
| What is the Fiscal Policy about of the European Union? | A policy concerned with budgets, how governments raise revenues, deficits and taxes. |
| What is the Exchange Rate Mechnism (ERM) ? | A system introduced by the EEC under which member states keep the values of their currencies stable relative to one another. |
| What is the Stability and Growth Pact? | An agreement by which governments control their budget deficits in the interests of currency stability and the stability of the economic and monetary union. |
| What is Sovereign Debt? | The public or national debt accumulated by a national government. |
| What is the Reserve Currency? | A resreve currency is a foreign currency held by central banks as a meeans of paying off international debt obligation. |
| What happens to exports and imports with a Low Value of Currency ? | Export are cheap, imports are expensive. |
| What happens to exports and imports with a High Value of Currency? | Exports are expensive and imports are cheap. |
| How is the Value of Currency determined? | The value is based on trust, impact and trading relations. |
| What is the "Trust" factor of how the Value of Currency is determined? | To what extend do consumers and businesses trust the currency. |
| What is the "Impact" factor of how the Value of Currency is determined? | How a particular actors can influence the currency such as a bank. |
| What is the "Trading relations" element of how the Value of Currency is determined? | Trading relations are dependent on many factors such as inflation, interest rates and public debts. |
| What is the 1st Stage of the Economic and Monetary Union? | Removal of last barriers to free movement of capital and independence of central banks. |
| What is the 2nd Stage of the Economic and Monetary Union? | Involves the coordination of monetary policy such as the convergence criteria and the establishment of the European Monetary Institute. |
| What is the 3rd Stage of the Economic and Monetary Union? | Permanent fixing of exchange rates, creation of the ECB and the stability and growth pact. |
| What are some Economic Reasons for the Euro? | To eliminate exchange rate risks within the euro, to have more fair play and save cost within the single market. |
| What are some Political Reasons for the Euro? | Integration and avoiding conflicts. |
| The Euro crisis was not an accident or the result of bureaucratic mismanagement but rather the inevitable consequence of what?? | Imposing a single currency on a very heterogeneous group of countries. |
