IB Chapter 8

84) Which of the following has adopted the U.S. dollar as its official currency? A) El Salvador B) Honduras C) Nicaragua D) Costa Rica 84) Which of the following has adopted the U.S. dollar as its official currency? A) El Salvador B) Honduras C) Nicaragua D) Costa Rica

A) El Salvador

46) A group of nations currently taking steps toward political union is ________. A) European Union (EU) B) Southern Common Market (MERCOSUR) C) Andean Community D) North American Free Trade Agreement (NAFTA)

A) European Union (EU)

35) Which of the following is the lowest level of regional integration? A) Free trade area B) Political union C) Common market D) Customs union

A) Free trade area

80) ALADI refers to the ________. A) Latin American Integration Association B) Southern Common Market Association C) Central Common Market Association D) Latin American Free-Trade Area

A) Latin American Integration Association

60) The ________ called for banking in a single common currency, setting up monetary and fiscal targets for countries taking part in monetary union, and political union of member nations. A) Maastricht Treaty B) European Monetary Union C) Single European Act D) Copenhagen Criteria

A) Maastricht Treaty

72) Which of the following is NOT a member of European Free Trade Association today? A) Sweden B) Liechtenstein C) Norway D) Switzerland

A) Sweden

56) Which of the following created the European Economic Community? A) The Treaty of Rome B) The Maastricht Treaty C) The Single European Act D) Warsaw Pact

A) The Treaty of Rome

38) The main difference between a free-trade area and a customs union is that the members of a customs union ________. A) agree to treat trade with all nonmember nations in a similar manner B) agree to the free movement of all factors of production C) harmonize their tax, monetary, and fiscal policies and create a common currency D) accept a common stance on economic and political policies regarding nonmember nations

A) agree to treat trade with all nonmember nations in a similar manner

47) Higher levels of trade between nations result in all of the following EXCEPT ________. A) greater standardization B) increased efficiency C) greater consumption D) higher standards of living Answer: A

A) greater standardization

70) The Council of the European Union is the ________ body of the European Union. A) legislative B) executive C) financial D) monitoring

A) legislative

The process whereby countries in a geographic region cooperate with one another to reduce or eliminate barriers to the international flow of products, people, or capital is called ________. A) regional economic integration B) region first policy C) intra-nation pact D) multi-domestic union

A) regional economic integration

76) According to the U.S. Trade Representative Office, exports to Mexico and Canada support some ________ million U.S. jobs. A) 1.1 B) 2.9 C) 3.7 D) 5.8

B) 2.9

83) A common market between Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua is referred to as the ________. A) Latin American Common Market (LACM) B) Central American Common Market (CACM) C) North American Common Market (NACM) D) Southern Common Market (MERCOSUR)

B) Central American Common Market (CACM)

54) The most sophisticated and advanced example of regional integration today is occurring in which of the following? A) Asia B) Europe C) North America D) Africa

B) Europe

41) Which of the following is best classified as an economic union? A) Southern Common Market (MERCOSUR) B) European Union (EU) C) North American Free Trade Agreement (NAFTA) D) Andean Community

B) European Union (EU)

63) The European Union plan that established its own central bank and currency in January 1999 is known as the ________. A) Single European Act B) European monetary union C) Copenhagen Criteria D) European currency exchange

B) European monetary union

65) Which of the following European Union countries opted out of transition to the euro? A) Norway B) Sweden C) Switzerland D) Finland

B) Sweden

69) The Court of Justice is the ________ of the European Union. A) Supreme Court B) court of appeals C) small-claims court D) capital crimes court

B) court of appeals

79) Today, the Andean Community is best described as a somewhat incomplete ________. A) free-trade area B) customs union C) common market D) political union

B) customs union

D) free trade area

B) customs union

43) A(n) ________ requires member nations to harmonize their tax, monetary, and fiscal policies and create a common currency. A) customs union B) economic union C) free trade area D) common market

B) economic union

71) The European Commission is the ________ body of the European Union. A) legislative B) executive C) financial D) monitoring

B) executive

52) Studies of the Southern Common Market (MERCOSUR) found that the net effect of the agreement was ________. A) trade diversion B) trade creation C) slower trade D) regional inflation

B) trade creation

57) The Treaty of Rome aimed at establishing common policies among member nations for ________. A) textiles and retail goods B) transportation and agriculture C) metal and cyclical products D) meat products and telecommunications

B) transportation and agriculture

77) In 2006, the United States and six Central American nations established the CAFTA-DR, which stands for ________. A) Coffee And Fruit Trade Agreement B) Central Area For Trade Agreement C) Central American Free Trade Agreement D) Central Andes Fair Trade Area

C) Central American Free Trade Agreement

55) In 1951, Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands created the ________. A) European Union B) European Economic Community C) European Coal and Steel Community D) European Free-Trade Area

C) European Coal and Steel Community

68) All of the following institutions play important roles in monitoring and enforcing economic and political integration in the European Union EXCEPT the ________. A) European Parliament B) Council of the European Union C) European Supreme Court D) European Commission

C) European Supreme Court

53) Which of the following requires nations to give up the least amount of sovereignty? A) Economic union B) Common market C) Free trade area D) Political union

C) Free trade area

75) Today, the United States exports more to ________ than it does to Britain, France, Germany, and Italy combined. A) China B) Japan C) Mexico D) South Korea

C) Mexico

58) Today, the number of European Union (EU) members stands at ________. A) 8 B) 13 C) 27 D) 18 59) The EU's goals of removing trade barriers, increasing harmonization, and enhancing the competitiveness of European companies were put forward in which of the following? A) Maastricht Treaty B) European Monetary Union C) Single European Act D) Copenhagen Criteria

C) Single European Act

59) The EU's goals of removing trade barriers, increasing harmonization, and enhancing the competitiveness of European companies were put forward in which of the following? A) Maastricht Treaty B) European Monetary Union C) Single European Act D) Copenhagen Criteria

C) Single European Act

73) Which of the following countries is NOT a member of the North American Free Trade Agreement (NAFTA)? A) Mexico B) United States C) Venezuela D) Canada

C) Venezuela

39) Economic integration whereby countries remove all barriers to trade and the movement of labor and capital between themselves and erect a common trade policy against nonmembers is called a(n) ________. A) economic union B) customs union C) common market D) political union

C) common market

81) Today, the Southern Common Market (MERCOSUR) is best described as a(n) ________. A) economic union B) political union C) customs union D) European Union

C) customs union

42) Economic integration whereby countries remove barriers to trade and the movement of labor and capital, erect a common trade policy against nonmembers, and coordinate their economic policies is called a(n) ________. A) customs union B) common market C) economic union D) free trade area

C) economic union

64) The common currency of the European Union is known as the ________. A) European currency unit B) eurodollar C) euro D) euromark

C) euro

82) The main challenge facing the Caribbean Community and Common Market (CARICOM) is ________. A) the bloc has not yet signed an agreement calling for a single market B) military conflicts continue to hamper efforts to move toward political union C) most members trade more with nonmembers than they do with each other D) the difficulty in persuading Chile to become a member

C) most members trade more with nonmembers than they do with each other

40) A(n) ________ represents the greatest degree of regional integration. A) economic union B) common market C) political union D) customs union

C) political union

44) Integration whereby countries coordinate aspects of their economic and political systems is called a(n) ________. A) free trade area B) common market C) political union D) economic union

C) political union

A group of nations in a geographic region undergoing economic integration is called a ________. A) regional domestic unit B) regional collaborative C) regional trading bloc D) foreign direct investment region

C) regional trading bloc

88) The stated aim of the organization for Asia Pacific Economic Cooperation (APEC) is to ________. A) build another trading bloc B) create a political union C) strengthen the multilateral trading system D) create a single unified economic union

C) strengthen the multilateral trading system

85) The Free Trade Area of the Americas (FTAA) is a trade agreement ________. A) between Mexico, Canada, and the United States B) among the South American nations C) that has been proposed to include all of North and South America D) that includes Brazil, Canada, the United States, and Mexico

C) that has been proposed to include all of North and South America

48) The increase in the level of trade among nations that results from regional economic integration is called ________. A) trade diversion B) trade restriction C) trade creation D) trade embargo

C) trade creation

74) The North American Free Trade Agreement comprises a market of ________ consumers. A) 120 million B) 220 million C) 320 million D) 445 million

D) 445 million

86) The only Western Hemisphere nation that would be excluded from participating in the Free Trade Area of the Americas (FTAA) is ________. A) Argentina B) Mexico C) the United States D) Cuba

D) Cuba

62) Which of the following was NOT called for in the Maastricht Treaty? A) Banking in a single, common currency B) Monetary targets for countries wishing to take part in monetary union C) Political union of the member nations D) Government debt less than 70 percent of GDP

D) Government debt less than 70 percent of GDP

49) Which of the following is NOT a result of trade creation? A) Lower costs tend to lead to higher demand for goods. B) Buyers can acquire goods and services at lower cost. C) Consumers are faced with a wider selection of goods. D) Imported goods are available at higher prices.

D) Imported goods are available at higher prices.

Which of the following is NOT a potential goal of regional economic integration? A) Protection of intellectual property rights B) Reduced environment degradation C) Creation of a political union D) Reduced cross-border investment

D) Reduced cross-border investment

67) Which of the following countries is expected to have difficult negotiations regarding its application for European Union membership?

D) Turkey

78) Main objectives of the Andean Community include all of the following EXCEPT ________. A) tariff reduction B) a common external tariff C) common policies in transportation D) a common currency

D) a common currency

61) The Maastricht Treaty did all of the following EXCEPT ________. A) called for a common currency B) established targets for monetary union C) called for political union of member nations D) called for a customs union of member nations

D) called for a customs union of member nations

Nations undergoing economic integration desire to accomplish each of the following EXCEPT ________. A) increase cross-border investment B) raise living standards for their people C) increase cross-border trade D) establish socialist government

D) establish socialist government

36) Economic integration whereby countries remove all barriers to trade among themselves, but each country determines its own barriers against nonmembers, is called a(n) ________. A) economic union B) customs union C) common market D) free trade area

D) free trade area

50) All of the following are potential drawbacks of regional integration EXCEPT ________. A) loss of national sovereignty B) shifts in employment C) trade diversion D) greater consensus

D) greater consensus

51) All of the following are true of trade diversion EXCEPT that it ________. A) is the opposite of trade creation B) can unintentionally reward a less-efficient producer within the trading bloc C) can increase prices of products D) guarantees consumers a wider selection of goods

D) guarantees consumers a wider selection of goods

87) Each of the following is an objective of the Association of Southeast Asian Nations (ASEAN) EXCEPT ________. A) promote economic, social, and cultural development in the region B) safeguard the region's economic and political stability C) serve as a forum in which differences can be resolved fairly and peacefully D) halving members' tariff rates from an average of 15 percent to 7.5 percent

D) halving members' tariff rates from an average of 15 percent to 7.5 percent

66) All of the following are true of the euro EXCEPT that it ________. A) eliminates exchange rate risk for business deals between members B) reduces transaction costs by eliminating the cost of converting currencies C) makes prices between markets more transparent D) is not accepted among merchants in France, Germany, and Italy

D) is not accepted among merchants in France, Germany, and Italy

45) Canada and the United States are early examples of ________. A) customs unions B) free-trade areas C) economic unions D) political unions

D) political unions