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Economic Management and the European Union

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Introduction

Economic Management and the European Union Report The European Union was formed on November 1st 1993. The Treaty of the European Union (also known as the Treaty of Maastricht) was ratified and the 12 member countries from the European Community became members of the European Union. These 12 countries were Belgium, Denmark, France, Germany, Greece, Republic of Ireland, Luxembourg, the Netherlands, Portugal, Spain and the United Kingdom. The European Union is dedicated to improving economic integration and improving cooperation, trade and relations between the member countries. Austria, Sweden and Finland took the total number of countries in the European Union to fifteen, when they joined in 1995. The total increases to 25 on May 1st 2004, when 10 new countries join the European Union. These are Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. Previously, the European Community consisted of 3 separate organisations. These were the European Coal and Steel Community (ECSC) formed in 1951, the European Economic Community (EEC) which was formed in 1957 and the European Atomic Energy Commission (Euratom) which was formed in 1957. These 3 institutions merged in 1967 and the European Community was formed in Brussels. The European Community Council agreed on a treaty in Maastricht, the Netherlands in 1992 after much bargaining between the members. Today the European Union represents a desire for peace and cooperation between the member countries. ...read more.

Middle

The USA is just ahead of the European Union at about 2.7%, 0.2% higher than that of the European Union in the 1990s. Japan is growing very fast but this is because of a very large population and extremely high population density. Japans population may only be 1/2 of the USA, and 1/3 of the European Union , but the size of the country can show that Japan is very overcrowded. Despite this, unemployment in Japan has been constantly kept very low and is only just above 2% at the moment. This is impressive for a very densely populated country. In comparison, the USA has unemployment at about 5.5%, but the European Union has a very unemployment rate of about 8.4%, but it was as high as 11%. Even though the European Union has the highest unemployment, it is the largest area and therefore it should be approximately equal to the USA, and maybe less than Japan. Of the three economies, Japan has the lowest Gross Domestic Product, but still a very high Gross Domestic Product per capita. The USA has the highest for both the Gross Domestic Product and the Gross Domestic Product per capita. The EU has the lowest Gross Domestic Product per capita, maybe because it has the largest population. Japan and the USA import more than they export so the have a trade deficit. Other developing countries export more as they are exploited because of cheap labour, land and prices of goods and services. ...read more.

Conclusion

Economic growth can still be achieved by higher-priced British goods. Resources and labour as well as capital need to be fully employed and used efficiently. This will lead to firms producing more goods that are generally of better quality. Resources are scarce so the resources of land labour and capital need to increase. Nationalized industries such as water and gas industries are natural monopolies and need to spend a lot of money on pipes, etc. to provide a lower average cost to their customers. Monopolies benefit from economies of scale and therefore the average cost of production decreases, lowering prices. Monopolies can be a good thing for any economy. Inflation is higher because of rising costs to produce goods. Wages are higher and therefore prices of commodities have increased due to this. The demand of higher wages would also mean that the productivity of workers would have to increase. This cost-push inflation can only be prevented by decreasing wages, however this is uneconomical as the cost of living is high. The increased cost of living is high because of higher prices on goods and services. So there is a circular flow of money which is good for the economy and encourages economic growth. The high value of the pound shows that the economy is in a great state for us. However, it is correct when you say that foreign will not buy our goods or come to this country but making the pound weaker is not such a good idea as we would be worse of. ...read more.

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