European Currency Unit (ECU)

• The Euro is the official currency of the European Union (EU), adopted by 19 of the 27 EU member states.

• The term Eurocurrency refers to foreign currency deposits held in banks outside their country of origin.

• The European Monetary System (EMS) was a managed exchange rate agreement created in 1979 to promote closer cooperation on monetary policy among members of the European Community (EU).

• The Eurozone refers to the economic and geographical region consisting of all countries of the European Union (EU) that use the euro as their national currency.

• The overshoot model establishes a relationship between stable prices and volatile exchange rates.

• Pegging is a way to control the exchange rate of the national currency by linking it to the currency of another country.

• A reserve currency is a large amount of currency held by central banks and large financial institutions for use in international transactions.

• USD is the three-letter abbreviation for the US dollar.

• Unsterilized foreign exchange interventions take place when a country’s monetary authorities influence exchange rates and its money supply.

• A weak dollar means that the value of the US dollar is declining relative to other currencies, especially the euro.

• A xenocurrency is a currency deposited or exchanged on a market outside its country of origin.

• An absolute advantage is when a manufacturer can provide a greater quantity of a product or service for the same price or the same quantity at a lower price than its competitors.

• Aggregate demand measures the total demand for all finished goods and services produced in an economy.

• All goods produced at a certain price in a certain period represent the aggregate supply.

• The League of Arab States is a regional multinational organization of the Arabic-speaking countries of the African and Asian continents.

• Autarky refers to a state of self-sufficiency and is commonly used to describe countries or economies that seek to reduce their dependence on international trade.

• The balance of payments includes both the current account and the capital account.

• The balance of trade (BOT) is the difference between the value of a country’s imports and exports over a given period and is the largest component of a country’s balance of payments (BOP).

• Base effect refers to the effect that the choice of base of comparison or benchmark can have on the result of a comparison between data points.

• The boom and bust cycle describes the alternating phases of economic growth and recession that characterize modern capitalist economies.

• The Bretton Woods Agreement and the system created a collective international currency exchange regime that operated from the mid-1940s to the early 1970s.

• A buyer’s market refers to a situation in which buyers have an advantage over sellers in price negotiations.

• The circular flow model demonstrates how money moves from producers to households and back in an endless cycle.

• Containment policies are macroeconomic instruments designed to combat economic distortions caused by an overheated economy.

Cost-push inflation occurs when general prices rise (inflation) due to an increase in the cost of wages and raw materials.#