Trade Blocs
- Created by: LouLouC
- Created on: 18-03-17 13:52
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- Trade Blocs
- Customs Union, Common Market, Free Trade Area
- + Trade Creation - the replacement of more expensive domestic production with cheaper output from a partner
- + Free Movement of Labour
- + Increased FDI
- - Trade Diversion - the replacement of cheaper imports with a less efficient partner from within the bloc
- - Brain Drain
- - Considerations of FDI
- EMU Requirements
- inflation target - 2% or below
- fiscal policy - budget deficit no more than 3% of GDP, national debt no more than 60% of GDP
- IR - set by European Central Bank, currently 0%
- Monetary Union
- + monetary efficiency gain
- + exchange rate risk
- + reduction in transaction costs
- + price transparency
- - loss of exchange rate
- - loss of IR cntrol
- - partial loss of fiscal policy
- - price transparency
- Customs Union, Common Market, Free Trade Area
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