Deck 9: Regional Economic Integration

Question 1

To achieve full economic union,the European Union (EU)introduced a common currency,the euro,controlled by a central EU bank.

Answer 1

True

Question 2

The European commission is the ultimate controlling authority within the European Union because draft legislation from the commission can become EU law only if the council agrees.

Answer 2

False

Question 3

The European Parliament is responsible for proposing European Union (EU)legislation,implementing it,and monitoring compliance with EU laws by member-states.

Answer 3

False

Question 4

In theory,the World Trade Organization rules should ensure that a free trade agreement results in trade diversion.

Question 5

A political union addresses the issue of how to make a coordinating bureaucracy accountable to the citizens of member nations of an economic union.

Question 6

Of the two trade blocs in Europe,the European Union is by far the most significant,in terms of membership as well as economic and political influence in the world economy.

Question 7

The Single European Act proposed to abolish restrictions on cabotage by the end of 1992.

Question 8

Economic theories suggest that free trade and investment is a positive-sum game,in which all participating countries stand to gain.

Question 9

In a customs union,a common currency is adopted.

Question 10

The European Parliament,which meets in Strasbourg,France,is primarily a legislative rather than consultative body.

Question 11

The emphasis of the European Free Trade Association has been on free trade in consumer goods.

Question 12

A common market has no barriers to trade among member-countries,includes a common external trade policy,and allows factors of production to move freely among members.

Question 13

As with free trade in general,regional economic integration creates gain for consumers,but it can be challenging for some producers.

Question 14

In a free trade area,all barriers to the trade of goods and services among member countries are removed and a common external trade policy is adopted.

Question 15

The Court of Justice,which is comprised of one judge from each country,is the supreme appeals court for European Union law.

Question 16

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

Question 17

Some economists have pointed out that the benefits of regional integration are determined by the extent of trade diversion,as opposed to trade creation.

Question 18

In terms of regional economic integration,linking neighboring economies and making them increasingly dependent on each other creates incentives for political cooperation between the neighboring states.

Question 19

With the signing of the Treaty of Rome in 1957,the European Free Trade Association was established.

Question 20

The European Council is composed of one representative from the government of each member-state but the membership varies depending on the topic being discussed.

Question 21

Mercosur originated in 1988 as a free trade pact between Chile and Argentina.

Question 22

_____ refers to agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods,services,and factors of production between each other.

A) Regional economic integration
B) Cross-cultural integration
C) Zoning agreement
D) Administrative trade policies
E) Balance-of-trade equilibrium

Question 23

Which of the following is the economic level corresponding to the least integration?

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

Question 24

The creation of a single market through regional economic integration offers significant opportunities because markets that were formerly protected from foreign competition are increasingly open.

Question 25

Since its establishment in January 1,1999,the euro has steadily appreciated against the U.S.dollar,reaffirming the ability of the European Central Bank to manage monetary policy within the euro zone.

Question 26

The stated aim of the Asia-Pacific Economic Cooperation is to increase multilateral cooperation in view of the economic rise of the Pacific nations and the growing interdependence within the region.

Question 27

Since the number of trade groups in the African continent is impressive,progress toward the establishment of meaningful trade blocs has been fast.

Question 28

The Andean Community now operates as a customs union.

Question 29

In an optimal currency area,similarities in the underlying structure of economic activity make it feasible to adopt a single currency and use a single exchange rate as an instrument of macroeconomic policy.

Question 30

An advantage of the emergence of single markets is that the lowering of barriers to trade and investment among countries has led to decreased price competition throughout the European Union.

Question 31

The basic objective of the Association of Southeast Asian Nations is to foster freer trade among member countries and to achieve cooperation in their industrial policies.

Question 32

The movement toward regional economic integration has been most successful in _____.

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

Question 33

By adopting the euro,the European Union has created the second most widely traded currency in the world after that of the U.S.dollar.

Question 34

Which of the following is true with regard to regional economic integration?

A) Agreements designed to promote freer trade within regions have failed to produce gains from trade for all member countries.
B) World Trade Organization members are not required to notify the organization of any regional trade agreements in which they participate.
C) Regional economic integration is good for consumers because it lowers prices.
D) Regional economic integration benefits producers because they do not have to adapt to a more competitive environment.
E) The movement toward regional economic integration been most successful in Asia.

Question 35

The most significant impact of the North American Free Trade Agreement has not been to create the background for increased political stability in Mexico.

Question 36

A major stumbling block in the creation of the Free Trade Area of the Americas is that the United States wants its southern neighbors to agree to higher manufacturing tariffs,which they are not eager to embrace.

Question 37

The North American Free Trade Agreement (NAFTA)refers to the free trade area between Canada,Mexico,and the United States.

Question 38

A disadvantage of the euro is that the development of a pan-European,euro-denominated capital market will decrease the range of investment options open to both individuals and institutions.

Question 39

Which of the following is true of regional economic integration?

A) Regional economic integration is good for producers because they do not have to adapt to a more competitive environment.
B) By creating a single market, the EU aimed to lower the price for goods and services across the bloc.
C) Regional economic integration poses a challenge for consumers as it increases the prices of goods.
D) The members of the World Trade Organization have refused to participate in any regional trade agreements.
E) Agreements designed to promote freer trade within regions have failed to produce gains from trade for all member countries.

Question 40

The Andean Pact was largely based on the European Union model and was highly successful at achieving its stated goals.

Question 41

Which of the following levels of economic integration involves the use of a common currency,harmonization of members' tax rates,and a common monetary and fiscal policy?

A) Free trade area
B) Customs union
C) Common market
D) Economic union
E) Command economy

Question 42

A(n)_____ is defined as a central political apparatus that coordinates the economic,social,and foreign policy of the member states.

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

Question 43

Which of the following is a solution to the issue of how to make a coordinating bureaucracy accountable to the citizens of member nations?

A) Establishment of a political union
B) Establishment of a customs union
C) Establishment of exclusive economic zones
D) Establishment of free trade agreements
E) Establishment of a common market

Question 44

Which of the following is true with regard to a free trade area?

A) Factors of production are allowed to move freely between member nations.
B) Each member country is allowed to determine its own trade policies with regard to nonmembers.
C) Member nations are required to have a common currency.
D) Member nations are required to have a common monetary and fiscal policy.
E) Member nations are required to have a central political apparatus that coordinates economic, social, and foreign policy.

Question 45

Which of the following is a major consideration that underlay the establishment of the European Community?

A) The pressing need to have a common currency that would make trade between European and non-European countries easier
B) The need for a united Europe to deal with the United States and the politically alien Soviet Union
C) The economic lessons from the Great Depression that hit the United States in the 1920s
D) The success of the European Free Trade Association formed by Western European countries in 1960
E) The rise of communism in Europe in the 1960s

Question 46

A(n)_____ is defined as a group of countries committed to removing all barriers to the free flow of goods and services between each other,but pursuing independent external trade policies.

A) free trade area
B) command economy
C) efficient market
D) foreign exchange market
E) location economy

Question 47

Concerns 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) job losses
B) national sovereignty
C) trade unionism
D) cultural uniformity
E) poverty

Question 48

Which of the following is true of the political case for regional economic integration?

A) Linking neighboring economies increases the potential for violent conflict.
B) Free trade stimulates economic growth, which creates dynamic gains from trade.
C) Making neighboring economies increasingly dependent on each other fails to create incentives for political cooperation.
D) Countries can enhance their political weight in the world by grouping their economies.
E) Those who have sought a united Europe have always had a desire to make another war in Europe imminent.

Question 49

Which of the following is an example of concerns over national sovereignty acting as an impediment to regional economic integration?

A) The Organization of the Petroleum Exporting Countries regulating the supply of petroleum as a cartel
B) The Asia-Pacific Economic Cooperation failing to establish itself as a regional arrangement
C) Admission of Eastern European nations into the European Union
D) Great Britain refusing to adopt the common currency of the European Union, the euro
E) The rise of the World Trade Organization

Question 50

Which of the following is true of the European Free Trade Association (EFTA)?

A) The emphasis of EFTA has been on free trade in agricultural goods.
B) Industrial goods were left out of the trade arrangement, each member being allowed to determine its own level of support.
C) Members cannot determine the level of protection applied to goods coming from outside EFTA.
D) It was founded by those western European countries that initially decided not to be part of the European Community.
E) It imposes a common tariff, of 5 to 20 percent, on products imported from outside.

Question 51

Which of the following is true with regard to an economic union?

A) There are restrictions on immigration, emigration, or cross-border flows of capital among member-countries.
B) It entails less economic integration and cooperation than a common market.
C) It involves the free flow of products and factors of production among member-countries.
D) It is defined as a central political apparatus coordinates the economic, social, and foreign policy of the member states.
E) It does not adopt a common external trade policy.

Question 52

Which of the following supports the economic case for regional economic integration?

A) International institutions such as the World Trade Organization have been moving the world away from a free trade regime.
B) The greater the number of countries involved in a free trade agreement, the fewer the perspectives that must be reconciled.
C) Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement.
D) It is difficult to establish a free trade and investment regime among a limited number of adjacent countries as compared to the world community.
E) Since most governments do not intervene, unrestricted free trade and FDI have become a reality.

Question 53

Which of the following is a feature of a common market?

A) Absence of a common external trade policy with regard to nonmembers
B) Allows free movement of factors of production between member nations
C) Establishment of barriers to the free flow of goods between member nations
D) Lack of administrative machinery to oversee trade relations with nonmembers
E) Requires the use of a common currency among member nations

Question 54

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

A) Value creation
B) Strategic pricing
C) Trade creation
D) Trade diversion
E) Economic exposure

Question 55

_____ are the most popular form of regional economic integration,accounting for almost 90 percent of regional agreements.

A) Licensing agreements
B) Economic unions
C) Common markets
D) Free trade agreements
E) Political unions

Question 56

A(n)_____ has no barriers to trade between member countries,includes a common external trade policy,and allows factors of production to move freely between members.

A) command economy
B) customs union
C) common market
D) efficient market
E) free trade area

Question 57

Which of the following is true of the theoretically ideal free trade area?

A) Factors of production are allowed to move freely between member nations.
B) Member countries are not allowed to determine their own trade policies with regard to nonmembers.
C) No discriminatory tariffs, quotas, subsidies, or administrative impediments are allowed to distort trade between members.
D) Member nations are required to have a common currency.
E) Member nations are required to have a common monetary and fiscal policy.

Question 58

Which of the following entails a closer economic integration and cooperation than a common market?

A) Command economy
B) Customs union
C) Efficient market
D) Free trade area
E) Economic union

Question 59

Which of the following are the two impediments to regional economic integration?

A) Labor activism and political ideologies
B) Immigration and political ideologies
C) Costs and national sovereignty
D) Political will and popular support
E) Political ideologies and international policies

Question 60

Three countries enter into an agreement to remove all tariffs and trade barriers between them.They decide on a common trade policy with regard to nonmembers.Faced with political backlash,the countries stop short of allowing mobility of factors of production such as labor and capital.Which of the following levels of economic integration best describes this arrangement?

A) Political union
B) Customs union
C) Common market
D) Economic union
E) Political union

Question 61

Which of the following is true about the European Commission?

A) The European Union's competition commissioner has been gaining influence as the chief regulator of competition policy in the member-nations of the European Union.
B) The European Commission has to be approved by the Council of the European Union before it can begin work.
C) The European Commission does not have a policing role with respect to European Union laws.
D) The legislation proposed by the European Commission goes directly to the European Parliament.
E) The European Commission is the ultimate controlling authority within the European Union.

Question 62

The European Community became the European Union in 1993 following the ratification of the _____.

A) Maastricht Treaty
B) Warsaw Pact
C) Treaty of Rome
D) Single European Act
E) Lisbon Treaty

Question 63

The European Community was established with the signing of the _____ in 1957.

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

Question 64

The _____,which has 754 members as of 2012,is directly elected by the populations of the member-states.

A) Court of Justice
B) European Council
C) European Commission
D) European Parliament
E) European Community

Question 65

Which of the following institutions has a monopoly in proposing European Union legislation?

A) Council of the European Union
B) Court of Justice
C) European Commission
D) European Parliament
E) European Community

Question 66

_____ occurs when higher-cost external producers are replaced by lower-cost external producers within the free trade area?

A) Trade creation
B) Strategic pricing
C) Value creation
D) Trade diversion
E) Protectionism

Question 67

A regional free trade agreement will benefit the world only if:

A) it raises the standard of living in one of the member countries.
B) the amount of trade it creates exceeds the amount it diverts.
C) the currencies of the nations involved appreciates.
D) the balance-of-trade situation remains stable in the region.
E) it creates trade surplus for one of the countries involved.

Question 68

Which of the following is considered to be the ultimate controlling authority within the European Union?

A) Court of Justice
B) European Commission
C) European Council
D) European Parliament
E) European Community

Question 69

Which of the following is true about the European Parliament?

A) It cannot propose amendments to legislations.
B) It is directly elected by the populations of the member-states.
C) It is primarily a legislative body rather than a consultative body.
D) It does not have the right to veto laws such as single-market legislation.
E) The European Parliament does not have the right to vote on the appointment of commissioners.

Question 70

The _____ is responsible for proposing European Union legislation,implementing it,and monitoring compliance with European Union laws by member states.

A) Council of the European Union
B) European Commission
C) European Parliament
D) Court of Justice
E) European Community

Question 71

The country of Argonia and the country of Berylia imposed tariffs on imports from all countries.They set up a free trade area,removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world.Argonia now begins to import sugar from Berylia.Previously,Argonia was indigenously producing sugar at a higher cost.Thus,Argonia benefits from this transaction.This is known as _____.

A) trade creation
B) strategic pricing
C) synergy
D) trade diversion
E) protectionism

Question 72

Which of the following are significant trade blocs in Europe?

A) The European Union and the European Free Trade Association
B) The European Federation and the European Trade Block
C) The European Commission and the COMINTERN
D) The European Federation and the European Trade Association
E) The European Economic Community and the European Federation

Question 73

Which of the following organizations,established in 1951,was the forerunner of the European Union?

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

Question 74

Suppose the country of Ceria and Lithinia imposed tariffs on imports from all countries,and then they set up a free trade area,scrapping all trade barriers between themselves but maintaining tariffs on imports from the rest of the world.Now,Ceria begins to import sugar from Lithinia.However,Ceria had previously been importing sugar from another country,Cadnia,which produced sugar more cheaply than Ceria or Lithinia.This is known as _____.

A) trade creation
B) strategic pricing
C) synergy
D) trade diversion
E) protectionism

Question 75

The European Council considered to be the ultimate controlling authority within the European Union (EU)because:

A) it monitors member states to make sure they are complying with EU laws.
B) it has a monopoly in proposing EU legislation.
C) it has 754 members that are directly elected by the populations of the member-states.
D) draft legislation from the European Commission can become EU law only if the council agrees.
E) it is the supreme court for appeals for EU law.

Question 76

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

A) Trade creation
B) Strategic pricing
C) Synergy
D) Trade diversion
E) Protectionism

Question 77

Which of the following is true of the Treaty of Rome?

A) It obliged all European Union members to adopt the euro.
B) It committed the European Community to establish common policies in agriculture and transportation.
C) It called for the establishment of internal trade barriers.
D) It allowed members to determine the level of protection applied to goods coming from outside.
E) It called for the abolition of a common external tariff.

Question 78

Which of the following is a factor that resulted in the establishment of the European Union (EU)?

A) The spectacular success of the North American Free Trade Agreement (NAFTA)
B) The trade impasse following the oil crisis in the 1970s that occurred due to collusion among oil producing nations
C) The devastation of Western Europe during two world wars and the desire for a lasting peace
D) The emergence of Japan as an economic and industrial superpower despite the nuclear holocaust
E) The rise of communism in Europe

Question 79

The _____,which meets in Strasbourg,France,is primarily a consultative rather than a legislative body.It debates legislation proposed by the commission and forwarded to it by the council.

A) European Parliament
B) European Central Bank
C) Court of Justice
D) European Free Trade Association
E) European Community

Question 80

The _____ is composed of one representative from the government of each member-state,and whose membership depends on the topic being discussed.

A) Court of Justice
B) European Council
C) European Commission
D) European Parliament
E) European Community