AGB 302 EVALUATION 2027 ANSWERS AND
QUESTIONS SET A+
✔✔european commission - ✔✔legislation, implementation, monitoring compliance
✔✔european council - ✔✔the ultimate controlling authority within the EU
✔✔European Parliament - ✔✔consultative rather than legislative but is at the top of the
chain
✔✔treaty of lisbon - ✔✔increased power of EU
✔✔court of justice - ✔✔Supreme appeals court for EU law
✔✔single european act - ✔✔created the delors commission, wanted to remove all
impediments and create a single market
✔✔maastricht treaty - ✔✔adopted common currency of the euro
✔✔european central bank - ✔✔created to use the euro
✔✔optimal currency area - ✔✔region in which similarities in economic activity make a
single currency and exchange rate possible (the EU is not)
✔✔why did they want brexit - ✔✔they wanted national sovereignty
✔✔NAFTA - ✔✔A trade agreement between Canada, the United States and Mexico
that encourages free trade between these North American countries.
✔✔results of nafta - ✔✔small but positive, some job losses
✔✔andean community - ✔✔b,c,e,c,p...resulted in low econ. growth, hyperinflation,
unemployment
, ✔✔mercosur - ✔✔brazil and argentina, dont work no more
✔✔central american common market CACM - ✔✔war broke it up
✔✔central american free trade agreement CAFTA - ✔✔tried to rebuild CACM and
included america
✔✔CAPRICOM - ✔✔carribean, failed, established CSME
✔✔Association of Southeast Asian Nations (ASEAN) - ✔✔organization for economic,
political, social, and cultural cooperation among Southeast Asian nations
✔✔foreign exchange market - ✔✔a market in which currencies of different countries are
bought and sold,, provides insurance against foreign exchange risk
✔✔spot exchange rate - ✔✔the exchange rate at which a foreign exchange dealer will
convert one currency into another that particular day
✔✔forward exchange rate - ✔✔the exchange rate governing forward exchange
transactions, reduces foreign exchange risk
✔✔future exchange rates are impacted by - ✔✔price inflation, interest rate, and market
psychology
✔✔currency swap - ✔✔simultaneous purchase and sale of a given amount of foreign
exchange for !two different value dates!
✔✔law of one price - ✔✔identical products should sell for the same price everywhere
✔✔Purchasing Power Parity - ✔✔price of particular goods should be the same in each
country (predicts long term not short term)
✔✔bandwagon effect - ✔✔expectations on traders turning into self-fulfilling prophecies
✔✔International Fisher Effect - ✔✔for any two countries the spot exchange rate should
change in an equal amount but in the opposite direction to the difference in nominal
interest rates between two countries
✔✔fundamental analysis relies on - ✔✔money supply growth, inflation rates, nominal
interest rates, balance of payments
✔✔nonconvertibility - ✔✔residents being unable to convert local currency by the
government
QUESTIONS SET A+
✔✔european commission - ✔✔legislation, implementation, monitoring compliance
✔✔european council - ✔✔the ultimate controlling authority within the EU
✔✔European Parliament - ✔✔consultative rather than legislative but is at the top of the
chain
✔✔treaty of lisbon - ✔✔increased power of EU
✔✔court of justice - ✔✔Supreme appeals court for EU law
✔✔single european act - ✔✔created the delors commission, wanted to remove all
impediments and create a single market
✔✔maastricht treaty - ✔✔adopted common currency of the euro
✔✔european central bank - ✔✔created to use the euro
✔✔optimal currency area - ✔✔region in which similarities in economic activity make a
single currency and exchange rate possible (the EU is not)
✔✔why did they want brexit - ✔✔they wanted national sovereignty
✔✔NAFTA - ✔✔A trade agreement between Canada, the United States and Mexico
that encourages free trade between these North American countries.
✔✔results of nafta - ✔✔small but positive, some job losses
✔✔andean community - ✔✔b,c,e,c,p...resulted in low econ. growth, hyperinflation,
unemployment
, ✔✔mercosur - ✔✔brazil and argentina, dont work no more
✔✔central american common market CACM - ✔✔war broke it up
✔✔central american free trade agreement CAFTA - ✔✔tried to rebuild CACM and
included america
✔✔CAPRICOM - ✔✔carribean, failed, established CSME
✔✔Association of Southeast Asian Nations (ASEAN) - ✔✔organization for economic,
political, social, and cultural cooperation among Southeast Asian nations
✔✔foreign exchange market - ✔✔a market in which currencies of different countries are
bought and sold,, provides insurance against foreign exchange risk
✔✔spot exchange rate - ✔✔the exchange rate at which a foreign exchange dealer will
convert one currency into another that particular day
✔✔forward exchange rate - ✔✔the exchange rate governing forward exchange
transactions, reduces foreign exchange risk
✔✔future exchange rates are impacted by - ✔✔price inflation, interest rate, and market
psychology
✔✔currency swap - ✔✔simultaneous purchase and sale of a given amount of foreign
exchange for !two different value dates!
✔✔law of one price - ✔✔identical products should sell for the same price everywhere
✔✔Purchasing Power Parity - ✔✔price of particular goods should be the same in each
country (predicts long term not short term)
✔✔bandwagon effect - ✔✔expectations on traders turning into self-fulfilling prophecies
✔✔International Fisher Effect - ✔✔for any two countries the spot exchange rate should
change in an equal amount but in the opposite direction to the difference in nominal
interest rates between two countries
✔✔fundamental analysis relies on - ✔✔money supply growth, inflation rates, nominal
interest rates, balance of payments
✔✔nonconvertibility - ✔✔residents being unable to convert local currency by the
government
