Ch 9

An economic union adds which three of the following features to common market's features?

1. Coordinated tax rates 2. Common currency 3. Common monetary & fiscal policy

The two restrictions put on new members that joined the EU were....

1. Free movement of labor among the new and existing members was prohibited for several years 2. They could not adopt the euro for several years

What are two characteristics of a common market?

1. No barriers to trade among member countries 2. Free movement of labor and capital

What are two responsibilities of the European Central Ban?

1. Set monetary policy 2. Set interest rates

To achieve full economic union, the European Union introduced a common currency, the euro, controlled by a central EU bank. Although most member states have signed on, __________ remains an important holdout.

Great Britain

Some people suspect that Turkey has been denied joining the EU because it is primarily a __________ nation.

Muslim

A(n) ___________ union consists of a central governing body that regulates the economic, social and foreign policy of member states.

Political

The text notes three specific reasons why the EU is considered an imperfect economic union. What are those three reasons?

1. Some markets are still not fully deregulated 2. There is a difference in tax rates across the countries 3. Not all members have adopted the same currency

The EU began as a ___________, which eliminates trade barriers between member countries and adopts a common external trade policy, but does not allow free movement of factors of production between member nations.

Customs union

The weakening of which currency helped raise the value of the euro beginning in 2001?

Dollar

T/F: There is consensus that EU is what economists would call an optimal currency area.

False

T/F: Trade diversion occurs when higher-cost domestic producers are replaced by low-cost producers within the free trade area.

False

One of the first steps to economic and political integration is a(n) _________ union, where trade barriers among member nations are removed and a common trade policy is adopted.

Customs

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

Free trade areas

T/F: Nearly all WTO members were participating in regional trade agreements by 2017.

True

T/F: The movement toward regional economic integration has been most successful in Europe.

True

T/F: While a nation as a whole may benefit significantly from a regional free trade agreement, certain groups within the country may lose.

True

T/F: In a free trade area, countries are not allowed to determine their own trade policies with nonmembers.

False

T/F: The European Union is considered an optimal currency area.

False

Which regional trade bloc includes Kenya, Uganda, and Tanzania?

EAC

The ________ concentrated in the trade of industrial goods and was made up of European countries that did not initially join the European Community.

EFTA

Restrictions have been placed on new members to the EU to combat the potential problems associated with....

Enlargement

The emerging role of the _________ in competition policy suggests the EU is increasingly willing and able to intervene and impose conditions on companies proposing mergers and acquisitions.

European Commission

As the text notes, support for the euro was compromised when ______ was put in the position of underwriting loans to bail out the governments of Greece, Portugal, and Ireland.

Germany

In the past few years, which EU member state has been of particular concern--specifically for the possibility of it defaulting on sovereign debut?

Greece

While the loss of national sovereignty has been the major reason for the British exit from the EU, more recently concerns over _________ have added to reasons for the exit.

Immigration

During 2007 and 2008, many investors were taking money out of the US by selling dollar-denominated assets, like US stocks, and purchasing euro-denominated assets. As a result, the value of the euro....

Increased

The basic objective of ASEAN is to foster freer trade among member countries and to achieve cooperation in their industrial policies. The progress of ASEAN is best described as......

Limited

After much debate, the Treaty of _________ was approved to increase the power of the European Parliament.

Lisbon

Trade diversion takes place when ________ (choose lower or higher) cost external suppliers are replaced by _________ (choose lower or higher) cost suppliers within a free trade area.

Lower; Higher

Regional economic integration offers significant opportunities for businesses. Which of the following is one of these opportunities?

Markets that were formerly protected from foreign competition are increasingly open

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 areas that are not as successful.

Prosperous regions

The Treaty of _________ established the European Community in 1957.

Rome

Experts believe that the British exit from the EU will cause Britain ________ short-term costs.

Significant

What is the ultimate controlling authority within the EU because it has the power to turn legislation into law?

The European Council

When higher-cost external producers are replaced by lower-cost external producers within the free trade area, _________ occurs.

Trade creation