4-Explain why the strong capital flows from the advanced countries into the peripheral countries in the

Eurozone resulted in a loss of external competitiveness and current account deficits in the latter

Countries.

5-Explain the meaning of the 'doom loop' ( or 'vicious circle) in the context of the interrelationship

between the banks and sovereign debt.

6-Explain why capital markets can force countries in the EMU with consistently high public budget deficits

to implement painful adjustment programs.

7-Explain why medium term interest of government bonds declined to roughly the same level after the

adoption of the Euro as a common currency although they had exhibited different levels just before they

became members of the Eurozone.