BUS 445 CH9
Q: The euro zone is comprised of the
A: 19 member nations who use the euro as their currency.
Q: The _____ is an attempt to establish a free trade area between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
A: Association of Southeast Asian Nations
Q _____ is a trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, which began in the early 1960s but collapsed in 1969 due to war.
A: Central American Common Market
Q: The _____ proposed that all impediments to the formation of a single market be eliminated by December 31, 1992, resulting in the Single European Act.
A: Delors Commission
Q: What is a defining characteristic of a free trade area?
A: Each member country is allowed to determine its own trade policies with regard to nonmembers.
Q: The _____ has a monopoly in proposing European Union legislation because the council cannot legislate without its permission.
A: European Commission
Q: The _____ is responsible for proposing European Union legislation, implementing it, and monitoring compliance with European Union laws by member-states.
A: European Commission
Q: Within the EU, it is the responsibility of the _____ to debate legislation and forward it to the council.
A: European Parliament
Q: How has adoption of the euro affected economic efficiency in European companies?
A: It has increased competition and produced long-run gains.
Q: The _____ committed European Community members to adopt a common currency by January 1, 1999.
A: Maastricht Treaty
Q: The European Economic Community became the European Union in 1993 following the ratification of the
A: Maastricht Treaty.
Q: How many trade blocs are in Europe?
A: Two
Q: Which trade agreement aims to remove all barriers to the free flow of goods between Canada, the United States and Mexico?
A: USMCA
Q: Mercosur was temporarily suspended in 2001 because of a(n)
A: economic crisis in Argentina.
Q: The European Union is considered a(n) _____ even though not all members have adopted a common currency.
A: economic union
Q: The six member countries that have embraced a common market are disappointed with the outcome of their economic integration. They want something that entails a closer economic integration and cooperation than a common market and decide to pursue a common currency. They are forming a(n)
A: economic union.
Q: What is the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements?
A: free trade agreements
Q: Great Britain, Denmark, and Sweden have stayed out of the euro zone because of the
A: implied loss of national sovereignty to the European Central Bank.
Q: The purpose of the Central America Free Trade Agreement is to
A: lower trade barriers between the United States and the Central American Common Market countries.
Q: An argument against the North American Free Trade Agreement centered on the fear that ratification would result in
A: mass exodus of jobs from the United States into Mexico.
Q: Two neighboring countries have the same wage rates, tax regimes, and business cycles. In addition, the two countries have reacted similarly to past economic shocks. These two countries can adopt a common currency because they form a(n)
A: optimal currency area.
Q: One result of the Single European Act was that it
A: provided the impetus for the restructuring of substantial sections of European industry.
Q: Regional trade blocs in Africa have been slow to establish mostly because of
A: significant political turmoil
Q: The Caribbean Single Market and Economy is modeled after
A: the EU's single market.
Q: The Central American Free Trade Agreement is an agreement to lower trade barriers between six nations and
A: the United States
Q: After the creation of a free trade area involving five nations, higher cost external fabric producers were replaced by lower-cost external fabric producers within the free trade area. This is known as
A: trade creation.
Q: Two foreign nations decided to impose 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. Country A now begins to import sugar from Country B. Prior to this, Country A was producing sugar at a higher cost so it now benefits from this transaction. This is an example of
A: trade creation.
Q: Suppose the countries of Iceland and Norway set up a free trade area, eliminating all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Now, Iceland begins to import wool from Norway. However, Iceland had previously been importing wool from England, which produced wool more cheaply than both Iceland and Norway. What is this an example of?
A: trade diversion
Q: As a result of the formation of a free trade area between six member countries in the Pacific Rim, one member country found that its lower-cost external suppliers were replaced by higher-cost suppliers within the free trade area. This is an example of
A: trade diversion.
