Question

1. Compare unemployment rate in the Czech republic to EU

2.. Advantages and disadvantages of replacing the Czech koruna in the Czech republic with the common currency, the euro

3. Describe function of foreign exchange reserves and the foreign debt of the Czech Republic as Payment balance

Answer 1

1) The Czech Republic ranked 3rd in terms of employment which was 80.1% as compared to the EU.

2) The necessary condition for the entry of the Czech Republic to the EU, both economic and political effects must be considered.

3) Exchange rate and debt

Explanation:

1) The Czech Republic ranked 3rd in terms of employment which was 80.1% as compared to the EU.

The average male employment rate is 78.9% that exceeds female employment 67.6%. In the EU, the male employment rate varies more degrees higher than the female employment rate.

The average unemployment rate is 6.9% in the EU and the Czech Republic is 2.1%.

The unemployment male rate in Czech is 1.9% and for a female is 2.3% and this is lower than the EU.

The employment situation in the Czech is better than the EU.

2) The necessary condition for the entry of the Czech Republic to the EU, both economic and political effects must be considered. The entry of the Czech Republic in the EU was a political decision but constrained by economic factors.

Czech was obliged to adopt the Euro as its official currency.

Advantages to Czech entering into EU:

1 Free trade between the members of the EU.

2 Reduction of border securities and fees that help in easing trade and promotes trade among the union countries.

3 The Czech Republic doesn't have to deal with foreign exchange rates directly.

4 It can trade at face value, and no need to consider the losses and gains from the exchange.

Disadvantages:

1 Labor markets become rigid.

2 Czech becomes converged in terms of income and price

3 No individual power to control money supply as they cannot print money.

4 They lose the ability to control inflation.

3) Foreign exchange reserves are the stock of foreign currency held by the central bank.

Reserves are used to pay for imports, or when export receive exchange them for local currency.

Banks use cash to buy sovereign debt because of low-interest rates.