Int B - Chapter 9

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

a permanent bailout fund

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

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

28

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

90%

political union

A central political apparatus coordinates economic, social, and foreign policy.

customs union

A group of countries committed to (1) removing all barriers to the free flow of goods and services between each other and (2) the pursuit of a common external trade policy.

common market

A group of countries committed to (1) removing all barriers to the free flow of goods, services, and factors of production between each other and (2) the pursuit of a common external trade policy.

economic union

A group of countries committed to (1) removing all barriers to the free flow of goods, services, and factors of production between each other; (2) the adoption of a common currency; (3) the harmonization of tax rates; and (4) the pursuit of a common external trade policy.

free trade area

A group of countries committed to removing all barriers to the free flow of goods and services between each other but pursuing independent external trade policies.

what is a positive-sum game?

A situation in which both parties or countries can gain.

Which industry is most affected by stipulations of USMCA?

Automobile

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

Bolivia Ecuador

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?

Costs of integration Concerns over national sovereignty

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

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

EU

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

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

Which two groups represent major trading blocks in Europe?

European Free Trade Association 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 (EFTA)

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

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

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

European Union

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

False

What are three advantages of regional market integration that can result in cost savings to a business? (Check all that apply.)

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

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

Free trade area

What is the least integrated form of economic integration?

Free trade area

What are the different layers of Economic integration from least to most integrated?

Free trade area, customs union, common unions, economic unions, political unions

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 Sweden Denmark

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

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

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.

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

Maastricht Treaty

Proponents of NAFTA argued many would benefit from the movement of low-skilled, labor-intensive production to ______, which might have a competitive advantage in this area.

Mexico

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

At what point will a regional trade agreement benifit?

Only if the amount of trade it creates exceeds the amount that it diverts.

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

Size of the country

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

What is the difference between customs union and commons union?

They both want to removing all barriers to the free flow of goods and services between each other but commons union includes factors of production

trade creation

Trade created due to regional economic integration; occurs when high-cost domestic producers are replaced by low-cost foreign producers within a free trade area.

trade diversion

Trade diverted due to regional economic integration; occurs when low-cost foreign suppliers outside a free trade area are replaced by higher-cost suppliers within a free trade area.

The Maastricht Treaty committed EU members to

adopt a common currency by January 1, 1999.

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

costs

The goal of NAFTA was to

eliminate tariffs on trade between the nations.

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 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.

Economic theories suggest that free trade allows countries to

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