International Business - Chapter 8

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

A) Maastricht Treaty

A(n) ________ combines the elimination of internal trade barriers among member countries with the adoption of common external trade policies toward nonmembers. A) customs union B) economic union C) free trade area D) common market

A) customs union

Scenario: Moonland Union Twenty-six nations of Moonland region, have decided to cooperate with one another to eliminate trade barriers among them and create the Moonland Union. They are not sure, however, to what extent they want to cooperate. As a first stage of cooperation, the countries agree to remove all barriers to trade among themselves. Each country also maintains policies it sees fit against nonmembers. At this stage, Moonland Union can be described as a ________. A) free trade area B) common market C) customs union D) political union

A) free trade area

Scenario: Moonland Union Twenty-six nations of Moonland region, have decided to cooperate with one another to eliminate trade barriers among them and create the Moonland Union. They are not sure, however, to what extent they want to cooperate. Which of the following would the government of Zucoland most likely experience as a benefit of joining the trading bloc? A) higher-wage employment B) trade diversion C) increased military security D) increased national sovereignty

A) higher-wage employment

The main challenge facing the Caribbean Community and Common Market (CARICOM) is that ________. A) most members trade more with nonmembers than they do with each other B) military conflicts continue to hamper efforts to move toward political union C) the bloc has had no success in persuading Chile to become a member D) the bloc has not yet signed an agreement calling for a single market

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

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

B) agree to treat trade with all nonmember nations in a similar manner, by having a common external tariff.

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) free trade area C) customs union D) common market

B) free trade area

Scenario: Moonland Union Twenty-six nations of Moonland region, have decided to cooperate with one another to eliminate trade barriers among them and create the Moonland Union. They are not sure, however, to what extent they want to cooperate. Some countries in Moonland Union are interested not just in free trade among themselves and a common trade policy against nonmembers, but also in removing all barriers to the movement of labor and capital among themselves. This type of integration is best described as a ________. A) preferential trading area B) free trade area C) common market D) customs union

C) common market

Which of the following countries has been facing difficulties in negotiations regarding its application for European Union membership? A) Bulgaria B) Romania C) Czech Republic D) Turkey

D) Turkey

The primary purpose of the Gulf Cooperation Council at its formation was to ________. A) introduce barriers to trade and investment B) increase members' tariff rates from an average of 7.5 percent to 15 percent C) create the largest free trade area on the planet D) cooperate with the increasingly powerful trading blocs in Europe at the time

D) cooperate with the increasingly powerful trading blocs in Europe at the time

A(n) ________ eliminates trade barriers among member countries, and is the lowest level of regional economic integration. A) common market B) economic union C) customs union D) free trade area

D) free trade area

Higher levels of trade between nations result in ________. A) trade diversion B) lesser specialization C) higher product prices D) greater purchasing power

D) greater purchasing power

A benefit of regional economic integration is that it always expands employment opportunities in all nations. TRUE FALSE

FALSE

Today, the Southern Common Market acts as a political union. TRUE FALSE

FALSE

Trade agreements hinder competitors from other nations to enter the domestic market. TRUE FALSE

FALSE

The Council of the European Union is the legislative body of the EU. TRUE FALSE

TRUE

The European Union (EU) and European Free Trade Association (EFTA) created the European Economic Area (EEA). TRUE FALSE

TRUE

The goal of the Single European Act was to remove remaining barriers, increase harmonization, and thereby enhance the competitiveness of European companies. TRUE FALSE

TRUE

The increase in the level of trade between nations that results from regional economic integration is called trade creation. TRUE FALSE

TRUE

The least amount of sovereignty that must be surrendered to a trading block occurs in a free trade agreement. TRUE FALSE

TRUE