Deck 8: Regional Economic Integration

Question 1

In a _____________,theoretically,there are no discriminatory tariffs,quotas,subsidies,or administrative impediments distorting trade between members.

A) free trade area
B) collective bargaining act
C) common exchange policy
D) customs exchange committee
E) free trade zone

Answer 1

A

Question 2

The European Free Trade Association's emphasis has been on free trade in what area?

A) services
B) agricultural products
C) industrial goods
D) consumer goods
E) capital

Answer 2

C

Question 3

An agreement between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods,services,and factors of production between each other is referred to as

A) regional economic integration.
B) cross-cultural economic integration.
C) geographic economic-political integration.
D) cross-cultural economic-political integration.
E) transnational economic integration.

Answer 3

A

Question 4

The European Free Trade Association currently includes the following four countries:

A) Ireland, Iceland, Denmark, and Belgium
B) Norway, Iceland, Switzerland, and Liechtenstein
C) Finland, Great Britain, Belgium, and Denmark
D) Sweden, Norway, Austria, and Finland
E) Romania, Bulgaria, Turkey, Croatia

Question 5

The most enduring free trade area in the world is the

A) Asian Free Trade Association.
B) MERCOSUR.
C) European Free Trade Association.
D) North American Trade Association.
E) European Union.

Question 6

Which of the following statement is not accurate in regard to the European Union?

A) Members of the European Union have mostly established a single currency
B) Members of the European Union are moving toward a closer political union
C) Members of the European Union have enlarged the EU to the current 27 countries
D) Members of the European Union are discussing a common language
E) Members of the European Union are discussing enlarging the EU to include another 4 European states

Question 7

As predicted by the theory of comparative advantage,there should be a ______________ from regional trade agreements.

A) substantial net gain
B) minor net gain
C) no economic impact
D) substantial net loss
E) substantial trade diversion

Question 8

In a theoretically ideal _____________,no discriminatory tariffs,quotas,subsidies,or administrative impediments are allowed to distort trade between member nations.Each country,however,is allowed to determine its own trade policies with regard to non-members.

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

Question 9

The European Free Trade Association (EFTA)is

A) the largest free trade area in the world.
B) the most affluent free trade area in the world.
C) founded by Western European countries that were not initially part of the European Community.
D) newest free trade area in the world.
E) open to any European country.

Question 10

In a free trade area

A) barriers to the trade of goods and services among member nations are removed.
B) a common currency is adopted.
C) a single Parliament determines political and foreign policy.
D) a common external trade policy is adopted.
E) a common labour policy is followed.

Question 11

As of 2014 there are _____________ member countries of the EU.

A) 4
B) 5
C) 20
D) 27
E) 28

Question 12

On January 1,1993,the _______________ effectively became a single market with 340 million consumers.

A) European Union
B) South American Union
C) North American Union
D) Southeast Asia Union
E) British Commonwealth

Question 13

The free trade area known as MERCOSUR consists of the following four countries:

A) Chile, Mexico, Columbia, and Paraguay
B) Argentina, Brazil, Paraguay, and Uruguay
C) Chile, Brazil, Uruguay, and Columbia
D) Mexico, Columbia, Paraguay, and Uruguay
E) Argentina, Chile, Uruguay, and Brazil

Question 14

The European Union effectively became a single market in

A) 1992.
B) 1998.
C) 1994.
D) 1993.
E) 2001.

Question 15

The following three countries implemented the North American Free Trade Agreement (NAFTA):

A) Panama, Mexico, and the United States
B) Canada, Brazil, and the United States
C) United States, Argentina, and Mexico
D) Canada, Mexico, and the United States
E) United States, Canada and Costa Rica

Question 16

According to the textbook,by entering into _______________,groups of countries aim to reduce trade barriers more rapidly than can be achieved under the WTO.

A) regional agreements
B) synergistic agreements
C) global agreements
D) transnational agreements
E) free trade zones

Question 17

The opening case shows that the European Court of Justice can deal with matters involving:

A) encouragement for EU integration
B) opposition to EU integration
C) the speed of integration
D) milk subsidies
E) national television markets

Question 18

Nowhere has the movement toward regional economic integration been more successful than in _______________.

A) Africa
B) South America
C) Asia
D) Europe
E) North America

Question 19

Which of the following selections accurately depicts the levels of economic integration from least integrated to most integrated?

A) Common market, economic union, full political union, free trade area, and customs union
B) Free market, economic union, full political union, free trade area, and customs union
C) Free trade area, customs union, common market, economic union, and full political union
D) Full political union, free trade area, common market, customs union, and economic union
E) Free trade area, common market, customs union, economic union, and full political union

Question 20

NAFTA stands for:

A) North Asian Free Trade Agreement.
B) North African Free Trade Association.
C) North Atlantic Free Trade Agreement.
D) North American Free Trade Association.
E) Northern Arctic Free Trade Association.

Question 21

Like the common market,a(n)_______________ involves the free flow of products and factors of production between members and the adoption of a common external trade policy.

A) free trade area
B) economic union
C) global union
D) customs union
E) currency union

Question 22

Like a customs union,the theoretically ideal ________________ has no barriers to trade between member countries and a common external trade policy.

A) free trade area
B) common market
C) tariff union
D) external market
E) regional market

Question 23

The European Community was established in

A) 1945.
B) 1957.
C) 1966.
D) 1979.
E) 1961.

Question 24

According to the textbook,most attempts to achieve regional economic integration have been what?

A) extremely successful
B) amicable and friendly
C) contentious and halting
D) uneventful
E) failures

Question 25

A common market includes all of the following characteristics except

A) factors of production are allowed to move freely between members.
B) there are no restrictions on immigration between members.
C) full economic integration.
D) there are no restrictions on the cross-border flow of capital between members.
E) a common external trade policy.

Question 26

Establishment of a _______________ trade policy necessitates significant administrative machinery to oversee trade relations with non-members.

A) political
B) free-customs
C) tariff
D) common external
E) common internal

Question 27

Which of the following is not an attribute of an economic union?

A) Political union
B) Common currency
C) Harmonization of members' tax rates
D) Free flow of products and factors of production between member countries
E) Common external trade policy

Question 28

Which of the following statements in true in regard to common markets?

A) The EU is the only successful common market ever established
B) Common markets are prevalent in Africa and South America
C) The popularity of common markets has waned over the years, and there are less than five successful common markets in existence today
D) The popularity of common markets is on the increase worldwide, and there are now over 20 successful common markets in existence
E) Common markets are less successful economic engines than customs unions

Question 29

In the context of regional trade integration,concern about ______________ arise because close economic integration demands that countries give up some degree of their control over such key policy issues as monetary policy,fiscal policy,and trade policy.

A) cost
B) national sovereignty
C) financial stability
D) cultural uniformity
E) tax sharing

Question 30

The Andean Pact is a(n)________________.

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

Question 31

According to the textbook,in regard to international trade,the theoretical ideal is

A) barriers to trade for developing nations, but not for industrial nations.
B) an absence of barriers to the free flow of goods, services, and factors of production among nations.
C) barriers to trade for industrial nations, but not for developing nations.
D) heavy barriers to the free flow of goods, services, and factors of production among nations.
E) an absence of barriers to the free flow of goods, services and factors of production among the member nations of a free trade agreement.

Question 32

Economic theories suggest that free trade and investment is a positive-sum game,in which

A) participating countries lose a little.
B) more participating countries gain than lose.
C) at least one participating country gains.
D) most participating countries lose.
E) all participating countries stand to gain.

Question 33

A _______________ eliminates trade barriers between member countries and adopts a common external trade policy.

A) free trade area
B) global union
C) tariff union
D) common market
E) customs union

Question 34

Because many governments have accepted part or all of the case for intervention,unrestricted free trade and FDI have proved to be

A) only an ideal.
B) a reality.
C) a goal which should be realized soon.
D) a goal that there is no rationale for.
E) a goal for the WTO.

Question 35

The two main reasons that have made economic integration difficult to achieve are

A) concerns over the safety of travel from one nation to another and concerns over dissimilar political ideologies.
B) concerns over costs and concerns over national sovereignty.
C) concerns over immigration and emigration and concerns over economic and political ideologies.
D) concerns over the safety of travel from one nation to another and concerns over national sovereignty.
E) concerns over revenue sharing and political interdependence.

Question 36

Which of the following statements is true in regard to economic unions?

A) The NAFTA is the only successful economic union in the world today
B) The popularity of economic unions has increased over the years, and there are now more than 10 Successful economic unions in existence
C) The EU is the only successful economic union in the world today
D) There are no true economic unions in the world today
E) The EU has decided to limit the strength of the economic union

Question 37

The political case for regional _______________ has also loomed large in most attempts to establish free trade areas,customs unions,and the like.

A) free trade areas
B) political organizations
C) customs unions
D) economic integration
E) economic spheres

Question 38

The two main reasons that have made ______________ difficult to achieve are cost and concerns over national sovereignty.

A) political integration
B) sociological integration
C) religious integration
D) cultural integration
E) economic integration

Question 39

The _______________,which is playing an even more important role in the EU,has been directly elected by citizens of the EU countries since the late 1970s.

A) North Atlantic Parliament
B) North Atlantic Trade Commission
C) European Parliament
D) European Trade Commission
E) European Union Commission

Question 40

Mexico's concerns about maintaining control of its oil interests resulted in an agreement with Canada and the United States to exempt the Mexican oil industry from any liberalization of foreign investment regulations achieved under NAFTA.This is an example of

A) a concern of national sovereignty.
B) concern over costs.
C) concern over safety.
D) concern over political ideologies.
E) concern over job losses.

Question 41

The purpose of the ______________ was to have a single market in place by December 31,1992.

A) North Atlantic Sovereignty Act
B) Single European Act
C) European Primacy Act
D) European Sovereignty Act
E) European Market Integration Act

Question 42

A _____________ will benefit the world only if the amount of trade it creates exceeds the amount it diverts.

A) regional free trade agreement
B) trade diversion
C) trade synergy
D) trade creation
E) trade development

Question 43

Many now see the _____________ as the emerging economic and political superpower of the same order as the United States and Japan.

A) European Federation
B) North Atlantic Trade Block
C) European Union
D) North Atlantic Federation
E) European Free Trade Area

Question 44

The European Union is the product of two political factors.The devastation of two world wars on Western Europe and

A) the European nations' desire to hold their own on the world's political and economic stage.
B) the unawareness of potential economic benefits.
C) the removal of barriers to other countries.
D) the emergence of an economic superpower.
E) the threat of Soviet aggression.

Question 45

______________ occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area.

A) Trade alteration
B) Trade qualification
C) Trade diversion
D) Trade creation
E) Trade diversification

Question 46

The ______________ is directly elected by the populations of the member states.

A) European Committee
B) European Parliament
C) European Union
D) European Task Force
E) European Joint Commission

Question 47

On January 1,2004 NAFTA celebrated _____________.

A) the one billionth cargo between Canada and the US
B) reaching one trillion dollars in annual trade
C) the transfer of the textile industry to Mexico
D) the establishment of the second maquilladora region in Mexico
E) its tenth anniversary

Question 48

The largest trading bloc in the world is _____________.

A) The EU
B) The EFTA
C) APEC
D) The Andean Pact
E) NAFTA

Question 49

_____________ occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area.

A) Trade diversion
B) Trade qualification
C) Trade synergy
D) Trade creation
E) Trade diversification

Question 50

The original forerunner of the EU,the __________ was formed in 1951 by Belgium,France,West Germany,Italy,Luxembourg,and the Netherlands.

A) European Union
B) European Coal and Steel Community
C) European Agricultural and Energy Union
D) European Textiles and Agricultural Community
E) European Community

Question 51

How many countries are members of the European Union?

A) 4
B) 9
C) 15
D) 36
E) 28

Question 52

The objective of the _______________ was to remove barriers to intragroup shipments of coal,iron,steel,and scrap metal.

A) European Federation
B) European Coal and Steel Community
C) European Union
D) North Atlantic Trade Area
E) European Community

Question 53

With the signing of the Treaty of Rome in 1957,the ______________ was established.

A) European Community
B) European Free Trade Association
C) European Coal and Steel Community
D) European Textiles and Coal Community
E) European Common Market

Question 54

_____________ occurs when high-cost domestic producers are replaced by low-cost producers.____________ occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area.

A) Trade synergy; Trade qualification
B) Trade qualification; Trade synergy
C) Trade creation; Trade diversion
D) Trade diversion; Trade creation
E) Trade growth; Trade manipulation

Question 55

In theory,_______________ rules should ensure that a free trade agreement does not result in trade diversion.

A) International Monetary Fund
B) World Bank
C) United Nations
D) World Trade Organization
E) GATT

Question 56

Of the two trade blocks in Europe,the _______________ is by far the more significant,not just in terms of membership,but also in terms of economic and political influence in the world economy.

A) European Free Trade Association
B) North Atlantic Trade Block
C) European Union
D) European Federation
E) Mediterranean common market

Question 57

The phenomenon that occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area is called

A) trade alteration.
B) trade qualification.
C) trade diversification.
D) trade diversion.
E) trade creation.

Question 58

The _______________ was born of a frustration among EC members that the community was not living up to its promises.

A) European Unification Act
B) Single European Act
C) European Free Trade Act
D) European Common Commerce Act
E) European Market Integration Act

Question 59

The EU was initially composed of ____________ member states.

A) 4
B) 5
C) 7
D) 15
E) 27

Question 60

With the signing of the ______________ in 1957,the European Community was established.

A) Treaty of Paris
B) Treaty of Brussels
C) Treaty of Switzerland
D) Treaty of Rome
E) Treaty of Zurich

Question 61

For participating countries,a drawback of a single currency in Europe is that

A) costs for doing business will increase.
B) it will be more difficult to attract imports.
C) national authorities will lose control over monetary policy.
D) it will be more difficult to compare prices across Europe.
E) foreign currency exchanges will have to be made through the European Central Bank in Frankfurt.

Question 62

The initial principles of The Andean Group included all of the following EXCEPT what?

A) internal tariff reduction program.
B) common external tariff.
C) transportation policy.
D) common currency among member nations.
E) common industrial policy.

Question 63

Which of the following was NOT one of the purposes of the Single European Act?

A) Remove all frontier controls between EU countries
B) Remove the principle of "mutual recognition" as it pertains to product standards
C) Open public procurement to non-national suppliers
D) Lift barriers to competition in the EC's retail banking and insurance businesses
E) Remove all restrictions on foreign exchange transactions between members

Question 64

According to our textbook,the move to a single currency in Europe should

A) have no effect on the cost of doing business in Europe.
B) significantly increase the cost of doing business in Europe.
C) significantly decrease the cost of doing business in Europe.
D) moderately increase the cost of doing business in Europe for North American nations, and significantly increase the cost of doing business in the EU for the rest of the world.
E) increase the cost of doing business with Europe.

Question 65

The Andean Pact was formed in 1969 when _____________ signed the Cartagena Agreement.

A) Bolivia, Chile, Argentina, French Guiana, and Venezuela
B) Brazil, Venezuela, Argentina, and Peru
C) Bolivia, Chile, Ecuador, Colombia, and Peru
D) Argentina, Chile, Ecuador, Columbia, and Guyana
E) Brazil, Columbia, Venezuela, Ecuador and Chile

Question 66

No other attempt at regional integration comes close to(the)______________ in its boldness or its potential implications for the world economy.

A) EU
B) NAFTA
C) Andean Pact
D) MERCOSUR
E) APEC

Question 67

According to the textbook,one likely short-term effect of NAFTA would be that many U.S.and Canadian firms will move some production to Mexico to take advantage of

A) cheaper transportation costs.
B) lower interest rates.
C) lower labour costs.
D) a higher skilled labour force.
E) the Mexican market.

Question 68

In 1988 the governments of the United States and Canada agreed to enter in a ______________,which went into effect on January 1,1989.

A) economic union
B) common market
C) political union
D) free trade agreement
E) customs union

Question 69

To signify the importance of the ______________,the European Community decided to change its name to the European Union once the act took effect.

A) European Unification Act
B) European Common Commerce Act
C) Single European Act
D) European Free Trade Act
E) European Market Integration Act

Question 70

Economic theory predicted that Canadian and U.S.producers would soon benefit from __________________.

A) increased B2B demand in the expanding Mexican industries that were geared toward export
B) increased demand for transportation products due to increased exports and imports
C) there would be no benefit because economic benefits would only be realized in the long-run
D) from lower labour costs once they moved to Mexico
E) increased consumer demand in Mexico, because of better wages

Question 71

The agreement that was designed to abolish within 10 years tariffs on 99 percent of the goods traded between Mexico,Canada,and the United states is called the:

A) North American Free Trade Agreement
B) American Federation
C) American Community
D) North Atlantic Trade Federation
E) North American Trade Federation

Question 72

MERCOSUR originated in 1988 as a free trade pact between ______________.

A) Mexico and Brazil
B) Peru and Brazil
C) Brazil and Argentina
D) Venezuela and Peru
E) Paraguay and Uruguay

Question 73

The principle argument of those that opposed NAFTA centered around the fear that ratification would result in:

A) higher interest rates in the U.S.
B) many Canadian and U.S. jobs transferred to Mexico
C) the move towards a common currency for NAFTA member nations
D) retaliation from the European Union
E) devalued currencies

Question 74

In 1999,the move toward a _______________ in the EU was given a further push by the adoption of a common currency,_______________,among a majority of the EU's member states.

A) single market; the Euro
B) regional economic market; Pound Sterling
C) cross-cultural market; Franc
D) global market; the Rupee
E) transparent border; the Ecu

Question 75

The implications of the Single European Act are

A) unknown.
B) enormous.
C) negligible.
D) moderately important.
E) positive and negative.

Question 76

As of 2014,what EU countries have not adopted the Euro?

A) Spain
B) Germany
C) Britain
D) United States
E) China

Question 77

One explanation for the continuing decline in the value of the Euro in 2001 was ________________.

A) the world was entering a recession and investors preferred the Swiss Franc
B) the terrorist attacks of September 11, increased the vulnerability of Europe
C) the Euro was seen as a temporary unit because the British refused to use it
D) The Euro zone was economically weaker than the U.S
E) The U.S. dollar was seen as a safe haven in times of trouble

Question 78

According to our textbook,the first year that NAFTA became a reality turned out to be

A) a largely positive experience for all three countries.
B) a largely negative experience for all three countries.
C) a largely positive experience for Mexico, and largely negative experience for the U.S. and Canada.
D) a largely positive experience for the U.S. and Canada, and a largely negative experience for Mexico.
E) a largely positive one for Mexico and Canada and a somewhat negative one for the U.S.

Question 79

The _____________ was formed in 1969 when Bolivia,Chile,Ecuador,Columbia,and Peru signed the Cartagena Agreement.

A) Andean Pact
B) Bolivian Pact
C) NW South America Group
D) South American Federation of Independent States
E) Cartagena Pact

Question 80

Which of the following was created to end the EC's economic divisions?

A) The Delors Commission
B) The North Atlantic Trade Federation
C) North Atlantic Community
D) European Commission
E) Blair-Prodi Commission