Final Exam Review!

Why are fiscal deficits and debt important in Greece, Ireland, Portugal or Spain?

After the economic crisis several eurozone member states (Greece, Portugal, Ireland, Spain and Cyprus) were unable to repay their govt debt and bail out banks under their national supervision without the assistance of third parties like other countries, the European Central Bank and the International Monetary Fund

What EU country has organized two referenda about the Lisbon Treaty? What was the result?

After the first vote by Ireland on the Lisbon Treaty, the European Council and the Irish Government released documents, referred to as the "Irish Guarantees", that stated the other member countries would not use the possibility in the Treaty to diminish the number of permanent commissioners in favour of a rotating system with fewer commissioners, and not threaten Ireland's military neutrality and rules on abortion. With these assurances, the Irish approved the unchanged Lisbon Treaty in a second referendum.

The architecture of the EU after the entry into force of the Treaty of Maastricht was based upon a model or figure. What was it? a. A tree with four branches. b. A temple with three pillars. c. A rocket with two engines. d. A house with no roof.

B

The European Monetary Unión and the economic crisis. You can write about the convergence criteria (what are they, when were they stablished?), the concept of Optimum Currency Area, the bailout programs, the role of the European Central Bank, what can be expected about the future of the Euro and the EU, etc. Show your knowledge!

But this positive picture changed dramatically after the recession of 2009. Eurozone members sank deeper into debt as their economies contracted, and they spent large sums on economic stimulus packages and bank bailouts. In 2010, interest rates on sovereign bonds soared because markets feared that countries like Greece and Portugal would default on debts. The ECB acted with alacrity to buy up much of this debt to reassure markets the euro would not crumble. With Europe's banking sector also in trouble, the ECB came to the rescue again. In late 2011 and early 2012, the ECB set up a series of Long Term Refinancing Operations - essentially low-interest loans to the tune of €1 trillion. since the crisis in 2009 the ECB used the more powerful grants of authority it received at its creation. New proposals further extend the ECB's domain. The 'banking union' legislative package extends the ECB mandate beyond the realm of monetary policy by putting it in charge of active supervision of 6,000 banks throughout the eurozone. If the legislation passes, the ECB will issue operating permits for banks, investigate their activities, and potentially dismantle them. Crisis led to the creation of the European Financial Stability Fund (EFSF), which recognizes that monetary union needs transfers. Now we have the European Stability Mechanism (ESM).

What are the fiscal deficits and debt in Greece, Ireland, Portugal or Spain? US?

DEBT: Greece 177% of GDP Ireland 96% Portugal 128% Spain 105% US 75% DEFECIT: Greece .7% Ireland 1% Portugal 2.1% Spain 3.6% US 3.2%

Can you tell the difference in composition between the European Council and the Council of the European Union (of Ministers)? And what is the Council of Europe?

European Council: This is by far the most influential institution - Provides broad guidelines for EU policy and thrashes out compromises on sensitive issues. President Donald Tusk. Council of the European Union: It's EU's main decision-making body • It's main task is to adopt new EU laws, e.g. Treaties, budget - It's also supposed to coordinate the general economic policies (ECOFIN) Council of Europe: international organisation to uphold human rights, democracy, rule of law in Europe and promote European culture.

The EU budget: Where does the money go? How big is it?

Expenditure: 1% GDP • EU spends the money on: (% different every year) - Farming 42% - 33% Poor regions - R&D 12% - 6% admin - 6% development - 1% eu programs

Talking about energy, what is the 20-20-20 strategy at the EU? What is the general purpose of it?

Greenhouse gas emissions to be 20% lower 20% of energy to be from renewable sources 20% increase in energy efficiency

The European CAP, justification of its existence.

Many small farmers will not survive without it. Everything would be big agro-businesses. • Farmers will not have other jobs in rural areas (where schools, stores, etc. will go with farmers). • Farmers are land managers (take care of pests, woods, etc.). • Agriculture is subject to the weather, forces of nature, unlike the industrial sector. So, liberalization is not possible. Food safety is important. • Low income elasticity of demand. Income for farmers tend to lag behind the average income in the industrial sector (no extra value added along time).

'Shadow voting' implies: a. That the participants join a consensus and no one actually 'votes'. b. That the result of the vote is very tight. c. It is a procedure used at the EU in decisions about foreign policy. d. The government of the big companies. It is always unfair to minorities and citizens.

a

Cohesion spending account for about ____ of the EU budget today. A) 30% B) 25% C) 10% D) 15%

a

In which year was the Treaty of Rome signed (not entered into force)? A) 1957 B) 1962 C) 1963 D) 1967 E) 1969

a

The Copenhagen criteria: A) Are the rules that define whether CEECs are eligible to join the European Union. B) Define new voting rules to be implemented after the membership of CEECs in 2004. C) Define the main steps of the elaboration of the Constitutional Treaty. D) Are the rules that define whether CEECs are eligible to join the Euro zone.

a

The Copenhagen criteria: a. Are the rules that define whether Central and Eastern European Countries (CEECs) are eligible to join the European Union. b. Define new voting rules to be implemented after the membership of CEECs in 2004. c. Define the main steps of the elaboration of the Constitutional Treaty for the CEECs. d. Are the rules that define whether CEECs are eligible to join the Eurozone.

a

The last three Presidents of the European Commission were (in order): A) Jacques Santer, Romano Prodi, José Manuel Barroso B) Jean Monnet, Romano Prodi and Jacques Delors C) Helmut Schmidt, Jacques Chirac and Jacques Delors D) Jacques Chirac, Tony Blair and Gerhart Schroeder.

a

What were the 3 traditional 'pillars' of the European Union established by the Maastricht Treaty? A) Economics, security and justice. B) Social, military and political. C) Economics, military and justice. D) Agricultural, security and political.

a

Which EU institution brings together the Heads of State and Government of the Member States? a. The European Council. b. The Council. c. COREPER. d. The Ecofin.

a

Which one of the following EU institutions does NOT participate in the legislative process? a. The Council. b. The European Parliament. c. The Court of Justice. d. The Commission.

a

What was the first European Community established by European countries? a. The European Coal and Steel Community. b. The European Atomic Energy Community. c. The European Economic Community. d. The European Union.

a - The Treaty establishing the European Coal and Steel Community was signed in April 1951 in Paris and it entered into force on 23 July 1952.

What is an Optimum Currency Area? What are the so-called 'asymmetric shocks'?

a geographical region in which it would maximize economic efficiency to have the entire region share a single currency. A change in microeconomic conditions that affects differently the different parts of a country, or different countries of a region.

EU citizenship is granted to: a. All persons residing within the territory of the EU. b. All nationals of the Member States but only if they reside within the EU. c. All nationals of the Member States irrespective of whether they reside within the EU or in countries outside the EU. d. Only smart or rich people (or both).

b

In which year was the Amsterdam Treaty signed (not entered into force)? A) 1992 B) 1997 C) 1999 D) 2000 E) 2002

b

The Court of Justice of the European Union A) Takes decisions subject to unanimous vote. B) Is the highest authority on the application of EU law. C) Consists of judges from each Member State, the number of judges being proportional to the state's population. D) Is located in Strasbourg

b

The President of the European Council A) is directly elected by European citizens. B) is elected by qualified-majority voting in the European Council C) is elected for five years. D) can hold a position in a Member state.

b

The real decision making body in the EU is: A) The European Court of Justice B) The Council C) The European Parliament D) The European Commission

b

The three main principles of EU law are: A) Subsidiarity, efficiency and legitimacy. B) Autonomy, direct applicability and primacy. C) Autonomy, efficiency and legitimacy. D) Subsidiarity, direct applicability and primacy.

b

Under the so-called "Ordinary Legislative Procedure" for EU law making, new laws are proposed by the ________ and must receive the approval of both the ________________ and the ____________. A) Council of Ministers, European Commission, European Parliament B) European Commission, Council of Ministers, European Parliament C) European Parliament, European Commission, Council of Ministers D) None of the above

b

What distinguishes a regulation from other secondary legislative acts? a. Regulations include an instruction to national parliaments to pass the appropriate legislation. b. Regulations have general application and are directly applicable in all Member States. c. Regulations require Member States to publish them in their national official press. d. Regulations are like directives

b

What is the legal requirement that an applicant State must satisfy for admission to the EU? a. The applicant State must agree to accept all EU laws passed subsequent to their joining the EU. b. The applicant State must accept EU acquis. c. The applicant State must agree to accept all the legislative acts they vote for in the Council. d. The country has to abide by the directives only, if it has not been negotiated otherwise.

b

What of the following affirmation is true? a. Most illegal immigrants in the EU come from sub-Saharan Africa. b. In some EU countries, you can buy your way to a permanent residence permit or even a national passport. c. Some illegal immigrants are given 'blue cards' to travel, but not to work in the EU. d. A refugee is,

b

When were the first direct elections for the European Parliament? a. In 1957. b. In 1979. c. In 2001. d. In 2007.

b

Which Member State had to hold a referendum for the ratification of the Treaty of Lisbon? a. The Netherlands. b. Ireland. c. France. d. The UK.

b

Which countries have joined the EU in 2007? a. Spain and Portugal. b. Rumania and Bulgaria. c. Poland, East Germany and Austria. d. Croatia only.

b

Which of the following are the primary sources of EU law? a. Regulations b. The Treaties c. Judgments of the Court of Justice. d. The Parliament, because it is democratically elected.

b

Why was the Schengen Agreement developed? a. To provide for a European Monetary Union. b. To abolish border controls among those Member States who signed the Agreement. c. To deal with the free movement of goods. d. To prepare the countries for the introduction of the Euro.

b

In which years were British membership applications rejected by Charles de Gaulle? A) 1957 and 1963 B) 1962 and 1969 C) 1963 and 1967 D) 1963 and 1969 E) 1965 and 1969

c

The Treaty of Lisbon enhances the principle of representative democracy with regard to the EU legislative process by: a. Involving national parliaments in the EU legislative process. b. Requiring Member States to organize national referenda on proposals vital to the development of the EU. c. Giving EU citizens the right to initiate legislative proposals. d. Giving democratically elected national governments the right to send proposals to the Council.

c

The euro was formally adopted in ____, but national bills and coins were replaced only in ____. A) 1998, 2000 B) 1999, 2000 C) 1999, 2001 D) 2000, 2002 E) 2001, 2002

c

The first High Representative of the Union for foreign affairs and security policies is A) Herman van Rompuy B) Catherine Ashton C) Javier Solana D) Romano Prodi

c

The path that led to adoption of the euro was set down in the _______. A) Treaty of Rome B) Single European Act C) Maastricht Treaty D) Amsterdam Treaty

c

The richest five EU members account for which Share of the GDP of the whole EU27? A) 10% B) 95% C) 80% D) 50%

c

The two biggest items in the EU budget are: A) Administration and research. B) Foreign policy and development assistance. C) CAP and cohesion spending. D) Foreign policy and cohesion spending.

c

What discretion does a directive give to a Member State? a. The Member State can decide whether to implement the directive or not. b. The Member State may select provisions of a directive which they wish to implement whilst ignoring the provisions which they consider as contrary to the national interest. c. The Member State can decide which form the implementation of the directive may take and whether any implementing measures are necessary. Accordingly, in some circumstance a Member State may do nothing (if it has already been done). d. Directives are opinions issued by the Commission with the approval of the Parliament.

c

What happens if there is a conflict between EU law and national law enacted after the entry into effect of the Treaties for the relevant Member State? a. The later national law will take priority. b. The conflict must be settled according to the legal jurisprudence of the Member State. c. EU law prevails. d. Depends on the situation. Often the national law prevails because is more democratic.

c

What was the main purpose of the Lisbon Treaty? a. To introduce the Euro as the currency of the EU. b. To allow for direct elections to the European Parliament. c. To amend the EC and EU Treaties to allow for the dramatic growth in the number of Member States. d. Among other things, to introduce the official flag in the Treaty.

c

Which of the EU institutions is known as the Guardian of the Treaties? a. The Council. b. The Court of Justice. c. The Commission. d. The Parliament, of course.

c

In which year was the Nice Treaty signed (not entered into force)? A) 1992 B) 1997 C) 1999 D) 2000 E) 2002

d

In which year was the Single European Act signed (not entered into force)? A) 1969 B) 1973 C) 1982 D) 1986 E) 1992

d

The Lisbon Treaty (European Treaty of Reform was rejected by ----------in ------- A) Finland, 2008 B) France, 2007 C) United Kingdom, 2008 D) Ireland, 2007 E) Spain, 2007

d

The Members of the European Parliament are: a. All members of their own national parliaments. b. Under instruction of their own party from their home nation c. Appointed by their national governments. d. Directly elected by EU citizens and are in office for 5 years.

d

The Members of the European Parliament are: A) all members of their own national parliaments. B) under instruction of their own party from their home nation C) appointed by their national governments. D) directly elected by EU citizens and are in office for 5 years.

d

The division of Germany into East and West Germany ended in ____. A) 1986 B) 1987 C) 1988 D) 1989 E) 1990

d

The least populous of the 12 nations that joined the EU in 2004 and 2006 is: A) Cyprus B) Estonia C) Hungary D) Malta

d

In which year was the Lisbon Treaty signed (not entered into force)? A) 2003 B) 2004 C) 2005 D) 2006 E) 2007

e

In which year was the Maastricht Treaty signed (not entered into force)? A) 1982 B) 1986 C) 1987 D) 1989 E) 1992

e

In the Treaty of Rome, EEC members only agreed to set up a Customs Union.; the so-called 1992 programme in the Single European Act instituted the principles of free mobility of labour, capital and services A) True B) False

false

Members of the European Parliament are appointed by their national parliaments. A) True B) False

false

The Council of Europe is part of the European Union. A) True B) False

false

The main goal of the Single European Act was to complete the ________ _________..

internal market

What is the Europe 2020 Strategy? Do you remember any of the goals?

is a 10-year strategy proposed by the European Commission in 2010 for advancement of the economy of the European Union. It aims at "smart, sustainable, inclusive growth" with greater coordination of national and European policy. EU leaders agreed the overall strategy to overcome the economic crisis by means of: • Smart growth - Better education, more research, greater use of communication technologies • Sustainable growth -A resource-efficient, greener and more competitive economy • Inclusive growth - More and better jobs, investment in skills and training, and welfare

What is an 'internal devaluation' and when is it necessary?

is an economic and social policy option whose aim is to restore the international competitiveness of some country mainly by reducing its labour costs - either wages or the indirect costs of employers.

How many "pillars" could you find under the EU "roof" of the EU before the Lisbon Treaty? What was the difference between the pillars?

since entry into the Lisbon Treaty, the European Community structure has been pulled under a single roof, that of the European Union. Now only one pillar the first pillar: European Community handled economic, social and environmental policies the 'second pillar: Common Foreign and Security Policy handles democracy, foreign aid, and defense policies the third pillar: Police and Judicial Cooperation in Criminal Matters (JHA). brought together co-operation in the fight against crime

What are the principles of 'subsidiarity' and proportionality'?

subsidiarity: the principle that a central authority should perform only those tasks which cannot be performed at a more local level. proportionality: The content and form of Union action must not go beyond what is necessary to meet the objectives of the Treaties

The CAP. How has it been reformed over time to avoid the 'mountains of butter'? What was the cause for those mountains?

the CAP-mandated demand for certain farm produce is set at a high level compared with demand in the free market. This leads to the EU purchasing tons of surplus every year at the stated guaranteed market price, and storing this produce in large quantities (leading to what critics have called 'butter mountains' and 'milk lakes'), before selling the produce wholesale to developing nations. Reforms: The McSharry reforms of 1992 replace guaranteed prices with a new system of direct payments of compensation to farmers if prices fell below a certain level. Also offered compensation for farmers who pursued environmentally friendly practices. The 1999 Berlin Council reforms came into effect in March 2003. They replaced production subsidies with a scheme of direct payments linked directly to compliance with a set of standards on food safety, animal rights and environmental concerns. The key thrust of the reforms has therefore been to break the link between subsidies and production, so that farmers produce for the market and not to gain financial support.

What is the most important difference between the Federal Reserve and the European Central Bank?

the ECB was designed as independent without any superior power upon itself to control and mandate its policies. Absence of strong political institutions in Europe capable of exerting control over the performance of the ECB is one of the weaknesses of accountability of the ECB. On the other hand, the governors of the Fed are appointed by the president of the USand approved by the Senate. Thus the Fed is responsible to Congress which has the power toaffect the internal circumstance of the Fed. By simple majority voting and throughinterventions by laws the structure and the functions of the Fed can change. "The US legislation makes the Fed responsible for all movements in employment." (Grauwe, 2005,179). - The ECB and the Fed have different objectives and different methods to achievethese objectives. The primary objective of the ECB is to achieve price stability; the Fed has chosen several goals to achieve; basically safe,flexible and stable monetary stability and financial system.

All new EU Treaties must be ratified by each Member State according to its own constitutional provisions. A) True B) False

true

Britain's application to the EEC triggered a domino effect in that Ireland, Denmark and Norway applied soon afterwards. A) True B) False

true

Norway was scheduled to join the EU with Sweden, Finland and Austria in 1994, but its voters rejected membership. A) True B) False

true

The EEC nations were, on average, poorer than the EFTA nations but grew faster between 1950 and 1970. A) True B) False

true

The EEC was established by the Treaty of Rome. A) True B) False

true

The EU's customs union was completed ahead of the schedule that was agreed for it in the Treaty of Rome. A) True B) False

true

The European Coal and Steel Community (ECSC) consisted of the same 6 nations that later formed the European Economic Community. A) True B) False

true

The European Commission now has one Commissioner from each Member State. A) True B) False

true

The European Parliament meets in Brussels and Strasbourg. A) True B) False

true

The Organization for European Economic Cooperation (OEEC) was set up to distribute Marshall Plan aid. A) True B) False

true

The Treaty of Rome called only for removal of barriers to trade in goods; the idea of trade in services was established later. A) True B) False

true

What is "shadow voting"?

when you persuade someone t vote in agreeable with you for a promise of a favor

Explain briefly the role and the structure of the EU Commission.

- to propose legislation to the Council and Parliament, - to manage and implement EU policies and the budget - to provide surveillance and enforcement of EU law • "guardian of the Treaties" each member in EU28 has one Commissioner.

What are the disadvantages of sharing a currency? (name three).

1. "One size fits all policy" - a single currency requires a single monetary policy. This means interest rates being set centrally for all Euro countries. 2. Differing policy effects - even when countries are closely in line, it may be possible that a single policy will have different effects on different countries. 3. Asymmetric Shocks - external economic shocks may have an adverse impact.

What are the advantages of sharing a currency? (name four).

1. Elimination of transaction costs 2. Comparability of prices/price transparency 3. Elimination of exchange rate risk 4. Better monetary policy. (An independent central bank)

The CAP reforms

1992: The McSharry reforms replaced guaranteed prices with a new system of direct payments of compensation to farmers if prices fell below a certain level. The McSharry reforms also offered compensation for farmers who pursued environmentally friendly practices. 2003: These reforms, came into effect in 2003, replaced production subsidies with a single payment scheme of direct payments and introduced the 'cross compliance' concept linking payments directly to compliance with a set of standards on food safety, animal rights and environmental concerns. 2013: This reform integrated a more land-based approach and sustainable agriculture with 'green' direct payments.