Chapter 9 International Business

Which three nations are a part of ASEAN?

Indonesia Philippines Singapore

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

Mercosur

Which group is the overall controlling authority within the European Union (EU) that must approve draft legislation from the European Commission before it becomes EU law?

The European Council

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.

True or False: The USMCA prohibits duties on music and ebooks.

True

What three countries made up NAFTA?

US, Canada, Mexico

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

dormant

What are three forms of economic integration?

-Full Political Union -Common market -Free trade area

Before the United Kingdom decided to exit the EU, how many total countries were involved by 2014?

28

The United States-Mexico-Canada Agreement renegotiated NAFTA and requires automakers to produce _____ of a vehicle's content in North America to qualify for zero tariffs.

75 percent

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

90 percent

Under the Andean Pact, which two members received special concessions based on the size of these countries?

Bolivia Ecuador

In 1969, which countries created the Andean Pact that was modeled on the EU, but was not as successful in achieving regional groups objectives?

Bolivia, Chile, Colombia, Ecuador, Peru

Mercosur is a free trade pact started in 1988 by which two South American economies?

Brazil Argentina

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

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

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

Commission

What are two impediments to establishing economic integration?

Concerns over national sovereignty Costs of integration

The ______ sets interest rates and monetary policy for the EU.

ECB

As the most enduring free trade area in the world, ______ concentrates on the free trade of industrial goods, but not agricultural products.

EFTA

What are two requirements countries must take to qualify for EU membership?

Establish stable democratic government Respect human rights

Which institution has a monopoly in proposing European Union legislation?

European Commission

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

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

Which of these trade unions is made up of European countries that decided NOT to be part of the European Community and emphasized free trade in industrial goods?

European Free Trade Association

Because of its economic and political influence, the _____ is considered the most significant trading bloc in Europe.

European Union

Which two groups represent major trading blocks in Europe?

European Union European Free Trade Association

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

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

True or False: Critics say that the EU is an optimal currency area which is why it is difficult to adopt a single currency.

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: While the NAFTA agreement provided many protections, it failed to include protections for intellectual property.

False

What is the least integrated form of economic integration?

Free trade area

Which three long-term members of the EU were NOT receptive to the euro as a common currency as set forth by the Maastricht Treaty?

Great Britain Denmark Sweden

In 2010, the IMF agreed to bailout _____ because of fears the country might default on its sovereign debt.

Greece

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 are two characteristics of the European Central Bank?

It was established to ensure price stability. It is meant to be free from political pressure.

Which agreement was an attempt at regional economic integration in the United States?

North American Free Trade Agreement

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?

Older Less educated

Which two Mexico-based industries were granted special protection from foreign direct investment under NAFTA?

Railway Energy

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

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

______ is considered the most successful attempt at regional economic integration.

The EU

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

The Maastricht Treaty

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

True

Which statement best describes the response by EU members to the introduction of the euro as a common currency?

While many members accepted the euro, several long-term members did not.

The European Stability Mechanism was established by the EU to create _____.

a permanent bailout fund

When an optimal currency area exists, similar underlying structures of economic activity make it more feasible to adopt _____.

a single currency

The Maastricht Treaty committed EU members to

adopt a common currency by January 1, 1999.

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

Regional _____ integration creates agreements among countries in a specific geographic area in order to reduce and eventually remove tariff and nontariff barriers to the free flow of goods.

economic

The goal of NAFTA was to

eliminate tariffs on trade between the nations.

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

free trade

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

free trade area.

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

There has been a(n) _____ in regional economic integration in the past two decades.

increase

It was acknowledged that one potential effect of NAFTA was that member countries would take advantage of ______ by moving production efforts to Mexico.

lower labor costs

Based on the objectives of the Single European Act, the principle of _____ states that a product standard developed in one EC country should be accepted in another.

mutual recognition

African countries have attempted to form a continental trade agreement, but have been stymied by significant ______ turmoil.

political

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

positive-sum game

The Single European Act abolished restrictions on cabotage, which is the

right of foreign truckers to pick up and deliver goods within another member state's borders.

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

size of the country.

Economic theories suggest that free trade allows countries to

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

A key impediment to economic integration is that although a majority of citizens may benefit from free trade, certain groups may lose their jobs to low-cost and low-skilled labor in other countries as was the experience of some U.S. and Canadian workers in the ______ industry following the establishment of NAFTA.

textile

Costa Rica, El Salvador, Guatemala, and other countries formed a common market in the early 1960s that was called

the Central American Common Market.

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

trade creation exceeds trade diversion.

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

two years

The collapse of the Central American Common Market was a result of ______.

war between Honduras and El Salvador