The UK's Decline as a Trading Partner and FDI Flows in the EU Quiz

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Questions and Answers

Which economic sector experienced the highest increase in share of EU total value added between 2000 and 2020?

Agriculture, forestry and fishing

Services (correct)

Industry

Construction

Which country in the EU had the highest share of services in total value added in 2020?

Ireland

Luxembourg (correct)

Cyprus

Malta

What was the R&D intensity in the EU in 2020?

2.32% (correct)

2.23%

1.99%

2.45%

Which country had the highest share of sold production in the manufacturing of food, beverages, and tobacco activities in 2021?

Greece Signup and view all the answers

Which country was the substantial producer of all three activities in the EU?

Germany Signup and view all the answers

Which account in the balance of payments includes compensation of employees?

Primary income account Signup and view all the answers

What is the difference between credits and debits in the balance of payments?

Credits are payments received from non-resident units, while debits are payments to non-resident units. Signup and view all the answers

What is the current account balance in surplus?

When overall credits exceed debits. Signup and view all the answers

What does the secondary income account represent in the balance of payments?

Current transfers between residents and non-residents. Signup and view all the answers

Which of the following is a reason for a country's decline in competitiveness?

Increase in the REER Signup and view all the answers

What are harmonized competitiveness indicators (HCIs)?

Indicators of a country's real EER Signup and view all the answers

What is the purpose of real HCIs?

To assess a country's price or cost competitiveness Signup and view all the answers

What are the three main accounts in the balance of payments?

Current account, Capital account, Financial account Signup and view all the answers

What does the acronym NACE stand for?

Nomenclature statistique des activités économiques dans la Communauté européenne Signup and view all the answers

What does the RSII index indicate when it is greater than 1?

The region is specialized in the production of goods and services of the sector of economic activity i Signup and view all the answers

What is the majority of firms according to the Eurostat size class classification?

Micro firms Signup and view all the answers

Which of the following is a purpose of reserve assets for monetary authorities?

Meeting balance of payments financing needs Signup and view all the answers

What is the formula for calculating the balance in the Balance of Payments?

Net acquisition of financial assets - Net incurrence of liabilities Signup and view all the answers

What is the Errors and omissions balance in the Balance of Payments?

It compensates deviations between real and financial transactions Signup and view all the answers

Which country is the largest country of origin for EU imports according to the text?

China Signup and view all the answers

Which category of cross-border investment involves a resident in one economy having control or a significant degree of influence on the management of an enterprise that is resident in another economy?

Direct investment Signup and view all the answers

What is included in the sale or purchase of non-produced, non-financial assets?

All of the above Signup and view all the answers

What is the functional classification used in the financial account to classify flows of assets and liabilities?

Direct investment, portfolio investment, financial derivatives, other investment, reserve assets Signup and view all the answers

What is portfolio investment?

Cross-border transactions and positions involving debt or equity securities, other than those included in direct investment or reserve assets Signup and view all the answers

What was the direction of change in the EU's inward and outward FDI flows in 2020-2021 according to the text?

Outward flows increased while inward flows decreased Signup and view all the answers

What is the real effective exchange rate (REER) used for according to the text?

To measure a country's international price and cost competitiveness Signup and view all the answers

What does a decline in the REER imply according to the text?

An improvement in a country's competitiveness Signup and view all the answers

Study Notes

Economic Sectors and Value Added

The services sector experienced the highest increase in share of EU total value added from 2000 to 2020.
In 2020, Ireland had the highest share of services in total value added among EU countries.

Research and Development

R&D intensity in the EU reached 2.3% in 2020.

Manufacturing Sector

France held the largest share of sold production in the manufacturing of food, beverages, and tobacco activities in 2021.
Germany was the substantial producer of all three activities in the EU.

Balance of Payments

The compensation of employees is included in the current account of the balance of payments.
Credits reflect inflows and debits represent outflows in the balance of payments.
A current account balance in surplus indicates that a country has received more income from abroad than it has paid out.
The secondary income account represents transfers without a quid pro quo, such as remittances and aid.

Competitiveness and Indicators

A country's decline in competitiveness can be attributed to factors like rising costs, poor policies, or ineffective regulation.
Harmonized competitiveness indicators (HCIs) analyze the competitive position of a country.
Real HCIs are used to adjust nominal competitiveness indicators for price differences across countries.

Balance of Payments Accounts

The three main accounts in the balance of payments are the current account, capital account, and financial account.
NACE stands for the "Nomenclature of Economic Activities," a classification system for economic activities.

Economic Indices and Firm Classification

An RSII index greater than 1 indicates that an industry's output is growing faster than other sectors in the economy.
According to Eurostat size class classification, the majority of firms are categorized as small enterprises.

Monetary Authorities and Balance of Payments

Reserve assets serve as a financial buffer for monetary authorities, aiding in managing economic stability.
The balance in the Balance of Payments can be calculated as: Balance = Credits - Debits.
The Errors and omissions balance accounts for discrepancies in the recorded data in the balance of payments.

Foreign Direct Investment (FDI)

China is the largest country of origin for EU imports.
Direct investment involves a resident in one economy having control or significant influence over a management enterprise in another economy.

Asset Transactions and Investment

Non-produced, non-financial assets include land and natural resources in sale or purchase transactions.
The functional classification in the financial account categorizes assets and liabilities based on their nature (such as direct investment, portfolio investment, etc.).
Portfolio investment refers to investment in financial assets such as stocks and bonds, without a controlling interest.

Foreign Direct Investment Trends

The EU's inward and outward FDI flows saw a decline in 2020-2021.
The real effective exchange rate (REER) serves as an indicator of a country's relative pricing structure compared to its trading partners.
A decline in the REER typically implies increased competitiveness of a country's goods and services in the global market.

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Description

"Test Your Knowledge on the UK's Decline as a Trading Partner and FDI Flows in the EU" - Take this quiz to assess your understanding of the rapid decline of the UK's importance as a trading partner in the EU and the downward trend in foreign direct investment flows. Test your knowledge on the impact of Brexit and the negative values attained by FDI net inflows and outflows between 2015 and 2018.