To understand the economic consequences of a European system of fixed exchange rates, and of a European monetary union, a grasp of the relevant aspects of economics is necessary. This chapter and the next will therefore explore a number of important concepts, some of which are not well understood by non-specialists, even though they are mentioned in the financial press from time to time. Misunderstandings about these fundamentals have impaired much of the public debate. Any readers who are uninterested in economic causation should perhaps skip to Chapter 5.