Deck 14: The European Union: Many Markets Into One

Question 1

Before the creation of the European Economic Community,there was the

A)European Economic Union.
B)European Coal and Steel Community.
C)European Union.
D)European Free Trade Area.

Answer 1

B

Question 2

Which of the following nations DOES use the euro and participate in the Treaty on European Union?

A)Sweden
B)Portugal
C)The United Kingdom
D)Norway

Answer 2

B

Question 3

The original European Economic Community

A)was a free trade area.
B)had 12 countries.
C)had a common language.
D)was a customs union.

Answer 3

A

Question 4

Which of the following is NOT part of the European Union?

A)Luxembourg
B)Austria
C)Portugal
D)Greece
E)Switzerland

Question 5

Which nation is NOT one of the current members of the European Union?

A)Greece
B)Germany
C)Sweden
D)Norway

Question 6

The primary legislative branch of the European Union is called the

A)European Commission.
B)European Parliament.
C)European Council of Ministers.
D)Council of the European Union.

Question 7

The majority of countries in the EU are relatively small.

Question 8

The common currency of the EU,the euro,was created in

A)1985.
B)1992.
C)1999.
D)2004.

Question 9

Originally,the European Union was called

A)the European Economic Partnership.
B)the European Economic Community.
C)the European Community.
D)the Common Market.

Question 10

The combined EU market is far larger than the NAFTA market in terms of GDP and population.

Question 11

The founding document of the European Economic Community,and the document that continues to provide the basis for the European Union is the

A)Treaty of Brussels.
B)Treaty of Rome.
C)Single European Treaty.
D)Maastricht Treaty.

Question 12

The European Union is the oldest,largest,and most ambitious integration agreement in the world today.

Question 13

The principle of subsidiarity states that

A)individual countries do not have to give up individual sovereignty for the good of the union.
B)the union only has the authority to deal with issues best handled by international action.
C)the union is the ultimate arbiter of all European issues.
D)the union has no authority within countries.

Question 14

The largest country in the EU is

A)Germany.
B)France.
C)the United Kingdom.
D)Italy.

Question 15

The Single European Act

A)created a common currency.
B)created a free trade area.
C)created a customs union.
D)created a common market for capital and labor.

Question 16

The principle of subsidiarity is a way to

A)divide power between local governments and unions.
B)provide support for industries in decline.
C)provide support for industries under pressure from foreign competition.
D)divide power between national governments and the EU.

Question 17

According to the principle of subsidiarity,in which of the following areas should the authority for making decisions be taken from national governments and given to the EU?

A)Pollution of a trans-national waterway
B)Limits on the hours retails stores are allowed to be open
C)Highway traffic laws
D)Recycling requirements on packaging

Question 18

Which of the following treaties/agreements would be associated with creating a free trade area for the European Union?

A)Treaty of Rome
B)Single Europe Treaty
C)Delors Agreement
D)Schengen Agreement

Question 19

Briefly describe the European Union.

Question 20

All countries in the European Union use the euro as their currency.

Question 21

A narrow target zone exchange rate band (such as the EEC had until 1992)is most similar to

A)a flexible exchange rate system.
B)a single currency.
C)a fixed exchange rate system.
D)a managed floating exchange rate.

Question 22

The United Kingdom dropped out of the ERM to avoid worsening a recession.

Question 23

What three sources of revenue finance the EU budget?

Question 24

The currency crisis of 1992 caused France and a number of other countries to choose between

A)a single currency for the EU and keeping their own currency.
B)doing the right thing for their domestic economy and defending the exchange rate.
C)lowering interest rates and reducing unemployment.
D)competitive devaluations and falling unemployment.

Question 25

The European Currency Unit (ECU)acted as a means of payment.

Question 26

A major reason for creating the European Monetary System was to

A)create a single currency.
B)unify banking laws and permit cross-border investment.
C)avoid competitive devaluations.
D)eliminate the need for central banks.

Question 27

Before European currencies were linked,countries would competitively devalue their currencies.

Question 28

Members of which European Union institution are popularly elected?

Question 29

Subsidiarity requires nations to give up some of their national sovereignty.

Question 30

Which of the following does NOT finance the EU budget?

A)A European income tax
B)Tariffs on goods entering the EU
C)A share of national value added taxes
D)A contribution from each country based on the size of its economy

Question 31

EU deepening refers to

A)legislation that restricts the sovereignty of individual countries.
B)activities that cause increased levels of integration in the national economies.
C)extending the boundaries of the EU to include new members.
D)adding additional countries into the single currency area.

Question 32

The roots of the European Union are in agreements within the coal and steel industries.

Question 33

Agricultural support and rural development programs account for nearly half of the EU budget.

Question 34

EU widening refers to

A)legislation that restricts the sovereignty of individual countries.
B)activities that cause increased levels of integration in the national economies.
C)extending the boundaries of the EU to include new members.
D)adding additional countries into the single currency area.

Question 35

Most cohesion funds in the EU budget go to the wealthier EU member nations.

Question 36

The single most important factor in the 1992 crisis of the EMS was

A)ratification of the Single European Act.
B)the near failure of the Maastricht Treaty.
C)German reunification efforts.
D)the outbreak of war in the former Yugoslavia.

Question 37

When Germany increased fiscal spending and raised interest rates in the early 1990s,

A)economic growth increased throughout Europe.
B)other countries were forced to raise interest rates to stay in the ERM.
C)it was unsuccessful in supporting East Germany.
D)it forced other countries to devalue their currencies.

Question 38

The purpose of creating the European exchange rate mechanism (ERM)was to

A)base trade and investment on comparative advantage.
B)prevent currencies from appreciating.
C)create barriers to trade.
D)let exchange rates float more freely.

Question 39

What are the two largest expenditure categories in the EU budget?

Question 40

Cohesion funds are used to make EU countries more culturally similar.

Question 41

All the countries of the EU participate in the Schengen Agreement.

Question 42

The "Four Freedoms" do NOT include the right to

A)vote in local elections.
B)migrate within the EU.
C)write insurance policies throughout the EU.
D)open bank accounts anywhere in the EU.

Question 43

The European Union became an economic union with the implementation of which treaty?

A)Treaty of Rome
B)Single Europe Treaty
C)Treaty on European Union
D)Schengen Agreement

Question 44

When did the European Union become a common market?

Question 45

As Europe explored monetary union,evidence to date suggests that increased variability in exchange rates

A)reduces foreign trade and investment.
B)increases foreign trade and investment.
C)does not seem to have an impact on foreign trade and investment.
D)hurts foreign investment but not trade.

Question 46

The single currency project in the EU will be most successful if European labor is relatively

A)immobile.
B)immobile and business cycles are not synchronized.
C)mobile and business cycles are synchronized.
D)mobile and business cycles are not synchronized.

Question 47

Which of the following is the treaty that took the participating countries from a free trade area to a common market?

A)The Treaty of Rome
B)The Maastricht Treaty
C)The Single European Act
D)The Treaty on European Union

Question 48

After implementation of the Single European Act,value added taxes in the EU were

A)completely harmonized.
B)unchanged.
C)partially harmonized with minimum and maximum permissible values set by the EU.
D)cut in half in order to increase the role of corporate taxes.

Question 49

Which agreement removes customs and passport controls at the common borders of many EU countries?

Question 50

Explain the major problems that occurred with the implementation of the SMP.

Question 51

How did the Single European Act create economic gains in the EU?

Question 52

One of the most controversial features of the Maastricht Treaty is

A)the lack of ability of individual countries to set their own monetary policies.
B)increased control of health and safety measures by the European Commission.
C)the free movement of labor throughout Europe.
D)the elimination of passport controls in parts of Europe.

Question 53

Explain why the European exchange rate mechanism (ERM)ran into problems in the 1990s.

Question 54

The Delors Report

A)created the single currency.
B)added new countries to the EU.
C)created a timetable and steps to economic union.
D)eliminate the ERM.

Question 55

With the full implementation of the Single European Act,the EU became a(n)

A)common market.
B)free trade area.
C)customs union.
D)economic union.

Question 56

Describe why the European exchange rate mechanism (ERM)was founded and how it worked.

Question 57

In the face of capital outflow,countries had to lower interest rates to stay in the ERM.

Question 58

The "Four Freedoms" are an important goal of the

A)Treaty of Rome.
B)Single European Act.
C)European Monetary System.
D)Maastricht Treaty.

Question 59

One drawback to a single currency is that

A)the exchange rate is more volatile.
B)bond markets are larger and therefore harder to control.
C)exporters and importers have fewer choices about how they will receive and make payments.
D)individual nations cannot use monetary policy to stabilize the economy.

Question 60

Gains from the Single European Act were expected to be from

A)reduction of transactions costs from having a single currency.
B)reduced trade barriers and customs problems.
C)increased competition and economies of scale.
D)harmonization of environmental and labor standards.

Question 61

The European Union membership criteria includes all of the following except

A)the country must participate in free trade with all of its goods and services.
B)the country must follow market-based economics.
C)the country must formally adopt the EU-wide rules such as technical standards, environmental inspections, banking supervision, etc.
D)the country must be a stable functioning democracy.

Question 62

Which EU institution has played a significant role is responding to the economic crisis that began in 2007?

Question 63

The fact that 10 additional nations joined the European Union in May 2004 is an example of deepening.

Question 64

Describe the history and consequent deepening as the European Union developed.Which treaties created which level of economic integration? Do countries have the ability to participate in some levels of integration and not others? Give specific examples.

Question 65

There is no possibility of further widening of the European Union.

Question 66

What challenges does the European Union face in the short,medium,and long run?

Question 67

Emigration is when people leave a country because of supply push factors.

Question 68

Explain the theories as to why the single currency was implemented quickly.

Question 69

Explain the costs and benefits of a single currency.

Question 70

The Single European Act was expected to create economic benefits by reducing the costs and risks of currency market transactions.

Question 71

Which of the following is NOT one of the major problems with expanding the EU?

A)Expansion has become a more difficult task because of the unwillingness of the eastern and central European countries to change.
B)The programs that target EU expenditures could be stretched thin by the addition of countries with much lower incomes.
C)The EU may be faced with an unstable eastern border with huge worker migratory flows if the transition economies fail.
D)Most central and eastern European countries have large agricultural sectors and extending subsidies to these countries would entail an enormous flow of funds given the Common Agricultural Policy.

Question 72

According to the text,what is the major long-run issue facing the European Union?

Question 73

Each of the 15 members of the European Union that joined before May,2004 use the euro as their currency.

Question 74

Other nations had tried economic union in the past,and since adopting a common currency had shown economic benefits for them,the nations of Europe decided to try it too.

Question 75

As populations age,public spending tends to increase.

Question 76

The first and biggest problem the EU faces in its expansion to the east is

A)the reform of its agricultural subsidy programs.
B)the lack of democracy in the countries that are most likely to become members.
C)the unwillingness of the new members to adopt EU rules.
D)the lack of market economies in the countries that are most likely to become members.

Question 77

Describe the criteria for membership in the European Union.Given the criteria,what are some of the major challenges with expanding the EU eastward? What are the potential problems of Turkey joining the EU?

Question 78

The Maastricht Treaty eliminated passport controls at borders with the European Union.

Question 79

Adopting the Single European Act had broad popular support; the Treaty on European Union was more controversial.