Chapter 9 extra credit IB

The Treaty of Lisbon created the position of ______ of the European Council.

president

Which organization is playing an emerging role in competition policy within the EU and serves as a potential threat to companies wishing to do business there?

European Commission

The European Community (EC) became the ______ in 1993.

European Union

In the political structure of the European Union, the ______ is composed of one representative from the government of each member state, but the membership varies depending on the topic being discussed.

European council

One of the reasons the European Union was originally formed was because

Europeans desired a lasting peace after enduring two devastating world wars.

The impending British exit from the EU is seen by other smaller member nations as a problem because Britain acts as a counterweight to the economic power of _____.

Germany

How did President Trump react to the two multilateral trade agreements, the Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership, which were being pursued by the Obama administration?

He pulled the United States out of these negotiations. -trump is opposed to free trade

The Association of Southeast Asian Nations was formed with the intent to foster _____.

free trade

When Norway, Iceland, Liechtenstein, and Switzerland established the EFTA, all barriers to the free flow of goods and services between the countries were removed. Member nations were allowed to determine the level of trade protection for goods coming from all other nations. What level of economic integration does this represent?

free trade area

The creation of a single market creates _____ costs of doing business.

lower

The number of votes a country gets in the European Council is related to the

-size of the country.

The trade pact developed in 1988, initially between Argentina and Brazil, is called ______.

Mercosur

The euro was established because a _____ currency would make it easier for Europeans to compare prices.

common

An argument against regional free trade agreements contends that the benefits have been oversold, but ______ have often been ignored.

costs

When high-cost domestic producers have been replaced by low-cost producers within a free trade zone, this is called trade __.

creation

Which institution has a monopoly in proposing European Union legislation?

European Commission

In the campaign to leave the EU, certain groups voted to stay and others voted to leave. What were two characteristics of those who wanted to leave?

-less educated -older

Under which treaty was the power of the European Parliament increased?

libson

Which two reasons are given as to why Europeans decided to establish a single currency?

-A single currency makes it easier to compare prices across Europe. -Businesses would achieve significant savings from having to handle just one currency.

What are the four main institutions responsible for determining economic policy in the EU?

-European Commission -Council of the European Union -Court of Justice -European Parliament

What are three advantages of regional market integration that can result in cost savings to a business?

-Harmonized product standards -Free movement of goods across borders -Simplified tax regimes

Which two political factors support the idea for economic integration of nations through trade?

-It can enhance the political weight of those countries in the world. -Interdependency among nations decreases the potential for violent conflict.

What two political factors led to the development of the European Union?

-The devastation of western Europe during the two world wars. -Europe's desire to hold its own on the world's political and economic stage.

Why is the announcement of the new trade agreement, referred to as USMCA by Donald Trump, so important for companies like Renault?

-The new agreement reduces uncertainty about trade in the region allowing firms to make strategic decisions. -Companies are happy with the announcement that a new trade deal had been reached by the United States, Canada, and Mexico because it reduces the uncertainty that had existed whilst the future of NAFTA was unknown.

Trade creation occurs when

-high-cost domestic producers are replaced by low-cost producers within the free trade area. -It may also occur when higher-cost external producers are replaced by lower-cost external producers within the free trade area.

What are two potential problems with an economic union?

-it requires a coordinating bureaucracy -there is a surrender of some national sovereignty

why is the EU an imperfect economic union?

-not all members of the EU have adopted the euro, the currency of the EU; differences in tax rates and regulations across countries still remain; and some markets, such as the market for energy, are still not fully deregulated.

In a free trade area, all barriers to the trade of goods and services among members are:

-removed -Each country, however, is allowed to determine its own trade policies with regard to nonmembers.

the benefits of regional integration are determined by:

-the extent of trade creation, as opposed to trade diversion.

What are two reasons for a customs union being put in place?

-to establish a common external trade policy -to eliminate trade barriers between member countries

after the British government formally notified of its intent to exit the European Union, the country had _____ to negotiate the terms of the exit.

2 years

The euro is the ______-most traded currency in the world.

2nd

According to Ross Perot, ratification of NAFTA would result in the loss of about ______ million jobs from the United States and Canada, as firms from these countries sought to capitalize on lower wages in Mexico.

5.9

Free trade agreements account for nearly ____ of regional economic agreements.

90%

In 2001, the ______ Community, made up of Kenya, Uganda, and Tanzania, tried to reinvigorate their trade agreement after it collapsed 24 years before.

East African

Mexico agreed to NAFTA after it was determined that the country's oil industry would be controlled by Mexico. Why did Mexico fight for this right?

It wanted to maintain national sovereignty.

What committed EU members to adopt a common currency by January 1, 1999?

Maastricht Treaty

The new trade deal in North America called USMCA by Donald Trump is a revision of the North American Free Trade Agreement (NAFTA). What was the initial impetus for NAFTA?

NAFTA was designed to eliminate barriers to trade among member countries thereby creating a larger and more efficient productive base for the entire region.

Regional trade blocs can possibly occur in markets that are protected from outside competition because ______ barriers are in place, and the WTO does not cover some of these types of barriers.

nontariff

Based on economic theories, free trade is viewed as a ______ as all participating nations stand to gain.

positive-sum game

One way to deal with euro economies that are NOT growing in unison is to engage in fiscal transfers, which involves taking money from ______ and giving it to areas that are not as successful.

prosperous regions

______ is an economic term that refers to high-cost domestic producers being replaced by low-cost producers within the free trade area.

Trade creation

______ is an economic term defined as replacing lower-cost external suppliers with high-cost suppliers within the free trade area.

Trade diversion

Which level of economic integration is present in an agreement that has no barriers to trade among member countries and allows factors of production (such as labor) to move freely among the members?

a common market

It is easiest to establish regional economic integration among

a limited number of adjacent countries.

The European Commission, to maintain the level of competition in the EU, is increasingly willing to impose conditions on businesses before allowing

a merger or acquisition.

The Maastricht Treaty committed EU members to

adopt a common currency by January 1, 1999.

If the proposed Regional Comprehensive Economic Partnership (RCEP) is successful at removing tariffs on cross-border trade between member countries

all member countries would stand to benefit, although the benefits may not be equally distributed.

An economist would say that the benefits of regional integration are determined by the:

amount of trade creation.

Regional economic integration:

an agreement among countries in a geographic area to reduce tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other

Which countries belong to the agreement referred to as USMCA by Donald Trump?

canada mexico US

The European Parliament must approve all members of the European ______ before this body can begin its work.

commission

A(n) ______ allows the free movement of factors of productions among member countries, eliminates trade barriers among member countries, and has a common external trade policy.

common

A(n) __________ has no barriers to trade among member countries, includes a common external trade policy, and allows factors of production to move freely among members, but does not have a common currency.

common market

The European Parliament is considered a _____ body.

consultative

In moving toward economic and political integration, a(n) ______ union removes trade barriers among member nations and establishes a common trade policy for nonmembers.

customs

How do members of the European Parliament gain their seat?

directly elected by the citizens

Since the WTO has a limited scope, the risk remains that regional economic integration will result in trade __.

diversion

When lower-cost external suppliers are replaced by higher-cost suppliers within a free trade zone, this is called trade __.

diversion

There are presently 19 trade blocs in Africa, and many of these blocs have been _____ for years.

dormant

A(n) ______ union adds more economic integration to a common market by requiring a common currency, a common monetary and fiscal policy, and harmonization of tax rates.

economic

If the proposed Regional Comprehensive Economic Partnership (RCEP) is achieved, it will rival the European Union (EU) when measured by the number of countries involved and their combined gross domestic product (GDP). The EU is an example of a(n)

economic union

The goal of NAFTA was to

eliminate tariffs on trade between the nations.

True or False: The introduction of the euro created greater competitive pressure in the European automobile industry which has resulted in higher prices for the consumer.

false

True or False: The political structure responsible for economic policies in the EU consists of a single office known as the Court of Justice.

false

True or false: Opponents of NAFTA felt that the program would result in a large exodus of jobs from Mexico.

false

true or false: The greater the number of countries involved in economic integration, the easier it is to reach an agreement among the countries.

false -more countries means more perspectives to consider so its harder to reach an agreement

economic theories advocate for_______ trade and investment that will allow participating countries to gain economically

free

A lack of barriers to the trade of goods and services among member countries is found in a(n)

free trade area

Which level of regional economic integration best describes the new free trade agreement in North America currently referred to as USMCA?

free trade area

While the terms of the Regional Comprehensive Economic Partnership (RCEP) are still being negotiated, if the agreement achieves just a(n) __________ status, all barriers to the trade of goods and services among member countries will be removed.

free trade area

Identify the correct sequence of economic integration starting from the least integrated to the most integrated.

free trade area, customs union, common market, economic union, and political union

The establishment of the euro is seen as a surprising political accomplishment because it required participating governments to

give up control over monetary policy.

During the campaign for leaving the EU, one of the recent claims said that leaving the EU would allow the British to take back control of _____.

immigration

When the euro-zone economies are NOT growing at the same rate, a common monetary policy linked to common currency may mean that ______ rates may not reflect any one individual country's needs.

interest

In a free trade area, all barriers to the trade of goods and services among member countries are_________

removed

the treaty of ____ established the european community in 1957

rome

Donald Trump's decision to pull out of negotiations for the Trans Pacific Partnership (TPP) motivated negotiators to come to terms on the Regional Comprehensive Economic Partnership (RCEP). Trump's actions could

shut U.S. companies out of RCEP markets if RCEP becomes a trade fortress.

A threat to firms outside of trading areas is the threat of being:

shut out of the market by the creation of a trade fortress

Economic theories suggest that free trade allows countries to

specialize in producing goods and service that they are most efficient at producing.

The creation of a single market increases price competition for business. In other words, it creates a(n)

threat

Some economists argue that regional free trade agreements will provide global benefits only if

trade creation exceeds trade diversion.

Two South American countries formed a free trade agreement. As a result, one of the countries that used to produce its own refrigeration units at a higher cost now imports them from the other country at a lower cost. This is an example of

trade creation.

True or false: One political reason for economic integration is the potential to minimize violent conflict between nations.

true