European Integration History Quiz

<p>A gradual approach with small steps (C)</p> Signup and view all the answers

<p>The Maastricht Treaty (B)</p> Signup and view all the answers

<p>To minimize the transaction costs related to currency exchange (C)</p> Signup and view all the answers

<p>Prices are sticky or rigid (A)</p> Signup and view all the answers

<p>Poor economic performance and market rumors (B)</p> Signup and view all the answers

<p>Imperfect monetary integration (D)</p> Signup and view all the answers

<p>A likelihood of currency devaluation (A)</p> Signup and view all the answers

<p>Cultural influences (C)</p> Signup and view all the answers

<p>Political autonomy versus supranational control (B)</p> Signup and view all the answers

<p>To establish a benchmark for value measurement (C)</p> Signup and view all the answers

<p>It offered conditional financial aid contingent on cooperation between countries. (C)</p> Signup and view all the answers

<p>The Declaration of Robert Schuman. (A)</p> Signup and view all the answers

<p>The Council of the EU. (C)</p> Signup and view all the answers

<p>Reconciliation between France and Germany. (D)</p> Signup and view all the answers

<p>It placed strategic resources under the supervision of a high authority. (A)</p> Signup and view all the answers

<p>Defense, justice, but lacking economic and currency coordination. (D)</p> Signup and view all the answers

<p>12 (C)</p> Signup and view all the answers

<p>The Treaty of Brussels. (C)</p> Signup and view all the answers

<p>Introduction of a custom union and free exchange of goods (A)</p> Signup and view all the answers

<p>The Commission (A)</p> Signup and view all the answers

<p>Common Agricultural Policy (CAP) (B)</p> Signup and view all the answers

<p>It was achieved 18 months in advance. (C)</p> Signup and view all the answers

<p>It was established with consultative powers only. (D)</p> Signup and view all the answers

<p>Stabilization and exchange rate policies of a common interest (B)</p> Signup and view all the answers

<p>Speculation leading to a crisis in the gold market (D)</p> Signup and view all the answers

<p>By facilitating increased trade and economic cooperation (D)</p> Signup and view all the answers

<p>5.79831 FF (A)</p> Signup and view all the answers

<p>GDP share, trade weight, and FECOM contribution (D)</p> Signup and view all the answers

<p>The definition of the ECU may change every 5 years. (A)</p> Signup and view all the answers

<p>75% of the floating band (A)</p> Signup and view all the answers

<p>A strong country cannot affect a weak country's pivot rate. (B)</p> Signup and view all the answers

<p>It serves as the denominator for all operations. (C)</p> Signup and view all the answers

<p>By ensuring that a currency reaching its upper band leads to another reaching its lower band. (A)</p> Signup and view all the answers

<p>It is computed every day and is complex in nature. (A)</p> Signup and view all the answers

<p>To display unity in Europe (C)</p> Signup and view all the answers

<p>Bundesbank's unexpected increase in interest rates (A)</p> Signup and view all the answers

<p>It generated a contagion effect on Scandinavian and EMS countries. (D)</p> Signup and view all the answers

<p>The Danish 'no' vote created uncertainty about Eurozone integration (D)</p> Signup and view all the answers

<p>Monetary autonomy is inconsistent with a single currency in free capital movement. (D)</p> Signup and view all the answers

<p>It allowed Europe to dominate the global currency market. (B)</p> Signup and view all the answers

<p>To ensure a larger share of world trade flowed through Europe. (A)</p> Signup and view all the answers

<p>Currencies became overvalued. (A)</p> Signup and view all the answers

The value of a currency can be influenced by factors such as economic performance (like unemployment, growth, or deficits) and market rumors.

A central bank defends its currency by buying it in the market using foreign currency reserves. This action aims to increase the domestic currency's value.

If speculation against a currency intensifies and the central bank's reserves deplete, the central bank may be forced to devalue the currency, effectively allowing it to weaken.

Short-term economic analyses assume prices are relatively fixed, while medium-term analyses consider prices to be somewhat flexible, and long-term analyses assume prices adjust freely.

The costs associated with converting one currency into another, including transaction fees and potential losses due to fluctuating exchange rates.

Choosing a single currency for transactions within an economic zone to minimize transaction costs and ensure stability.

The exchange rate is influenced by various structural, political, psychological, and economic factors, making its control a complex issue.

Monetary policies may have conflicting aims: managing domestic economic variables while also influencing international trade and exchange rates.

A period of time following World War II characterized by widespread destruction, human losses, and economic disruption, prompting the need for extensive reconstruction efforts across Europe.

The division of the world into two opposing blocs: the capitalist West led by the United States and the communist East led by the Soviet Union.

A proposal by Winston Churchill, the first minister of the UK, suggesting the creation of a United States of Europe. It emphasized reconciliation between France and Germany as essential for European unity.

The Marshall Plan, a program providing financial aid from the US to European nations. It aimed to reconstruct economies in war-torn Europe, but included conditions for aid, requiring recipient countries to help each other.

The Council of Europe, founded in 1949, aims to promote human rights, democracy, and the rule of law among its member states. It plays a significant role in European cooperation.

The European Convention on Human Rights, drafted in 1950, lays out fundamental human rights for everyone within the Council of Europe's jurisdiction. It serves as a cornerstone of human rights protection in Europe.

The European Court of Human Rights, established in 1959, is responsible for ensuring that member states of the Council of Europe respect the European Convention on Human Rights. It acts as a guardian of human rights.

A declaration made by Robert Schuman in 1950, promoting sustainable peace and advocating for the joint management of coal and steel resources. It aimed to prevent future wars by creating interdependence and reducing conflict potential.

The Treaty of Rome established the European Economic Community (EEC) in 1957. It aimed to coordinate economic policies, promote trade liberalization, and foster economic development. However, it didn't address a common monetary policy nor unification.

The European construction faced a dilemma between economic (eco) and political (po) perspectives. The eco side emphasized economic integration and stability, while the po side prioritized national autonomy and resisted supranationality. This tension created challenges for the EU's development.

Achieving economic convergence among member states while respecting national autonomy was a significant obstacle for the EU. The balance between economic integration and political sovereignty remained a key dilemma.

The European construction initially pursued a gradualist approach to monetary integration with small steps towards a shared currency. This strategy aimed to mitigate risks and build consensus among member states.

The Maastricht Treaty (1992) marked a turning point in the EU's monetary integration. It set concrete timelines for establishing a single currency, the euro, and a European Central Bank (ECB), leading to a more unified and stable financial system.

The European Economic Community (EEC) aimed to create a common market where goods, capital, services, and people could move freely, like a single economic area.

The EEC established common policies like the Common Agricultural Policy (CAP) to standardize agricultural practices and support farmers across member states. And the European Community of Atomic Energy (Euratom), focused on nuclear research and energy.

The EEC had its own institutions, like the Commission, which represented member states. Think of it as a unified government for the EEC.

The Council of Ministers was composed of representatives from each member country's government, like a board of directors.

The European Parliament brought together representatives elected by the people of each member state. It was in charge of making laws, like a national parliament.

The Court of Justice ensured that all member states enforced EEC rules, like a powerful court system.

The Bretton Woods Agreement set the stage for a new gold standard system where currencies were pegged to the US dollar, which was fixed to gold.

The devaluation of the British pound and speculation against the US dollar created a crisis in the gold market, as investors sought gold as a safe haven.

The European Currency Unit was a basket of currencies used by the European Community. It was proposed as a precursor to the European single currency.

The European Economic Community (EEC) was formed in 1957 by the Treaty of Rome. The goal of the EEC was to create a free-trade zone and to coordinate economic policies across member states.

The Maastricht Treaty, signed in 1992, established the European Union (EU) and set the stage for the introduction of the Euro. It also specified standards for membership and requirements for economic convergence that countries need to fulfill. One of the key features of Maastricht was the creation of the European Central Bank (ECB), which is solely responsible for setting interest rates for the euro area.

A period of economic crisis occurred in Europe in 1992 due to various factors, including rising interest rates, market pressure on currencies, and the uncertainty surrounding the adoption of the Euro.

The Mundell-Fleming Trilemma describes the limitations of economic policy in a world with free capital movements. A country cannot maintain fixed exchange rates, an independent monetary policy, and free movement of capital all at the same time. This implies that a nation must compromise and choose at least one of these options.

The European Monetary System (EMS) was a system of fixed exchange rates among European currencies that ran from 1979 to 1999. The EMS was designed to stabilize exchange rates and foster economic cooperation among member states. Countries operating under the EMS committed to maintaining the value of their currency within a pre-determined range. The EMS laid the groundwork for the Euro, but challenges arose due to different inflation levels and economic policies across member countries.

The ECU was a unit of account used by the European Community (EC) to measure its economic activity. It was calculated based on a weighted average of the values of several European currencies.

The ECU's value was determined by a basket of currencies, with the weight of each currency based on three main criteria: the country's share of the EC's total trade, GDP, and contribution to the European Community Financial Mechanism (FECOM).

The ECU’s value was recalculated every five years if the weight of any currency changed by 25% or more, reflecting changes in economic importance.

Within the European Monetary System (EMS), each member country had a 'pivot rate' for their currency, representing the exchange rate of their currency against the ECU. This rate served as a fixed exchange rate.

The EMS allowed fluctuation bands of plus or minus 2.5% relative to the 'pivot rate'. However, the 'divergence threshold' of 7.5% triggered corrective actions.

When a currency reaches its divergence threshold, the member country would use a combination of exchange rate intervention, domestic monetary policy, or changes in the pivot rate to restore equilibrium.

The EMS mechanism provided a more balanced system than the previous 'snake' system by requiring simultaneous intervention in both currencies involved. This ensured that a country could not devalue its currency without affecting the other involved.

The ECU played a critical role by serving as a common currency denominator for economic activity in the EC, helping to determine contributions to the FECOM and simplifying economic calculations. Its value was computed daily, reflecting the changing economic landscape.