Chapter 9 - Cozy Global Business
Which of the following is the economic level corresponding to the least integration? A. A free trade area B. A customs union C. A common market D. An economic union E. A political union
A. A free trade area
Establishment of which of the following would hold a coordinating bureaucracy accountable to the citizens of member nations? A. A political union B. A customs union C. An exclusive economic zone D. A free trade agreement E. A common market
A. A political union
Which of the following refers to a 1969 agreement among Bolivia, Chile, Ecuador, Colombia, and Peru to establish a customs union? A. Andean Pact B. ASEAN C. Mercosur D. CARICOM E. Caribbean Single Market and Economy
A. Andean Pact
Which of the following is a reason why Mercosur was temporarily suspended in 2001? A. The dotcom bust in Paraguay B. An economic crisis in Argentina C. The exit of Uruguay from the group D. The devaluation of the Mexican peso E. The Venezuelan financial crisis
B. An economic crisis in Argentina
Three countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common trade policy with regard to nonmembers. Faced with political backlash, the countries stop short of allowing mobility of factors of production such as labor and capital. Which of the following levels of economic integration best describes this arrangement? A. Political union B. Customs union C. Common market D. Economic union E. Monetary union
B. Customs union
Which of the following is true with regard to a free trade area? A. Factors of production are allowed to move freely between member nations. B. Each member country is allowed to determine its own trade policies with regard to nonmembers. C. Member nations are required to have a common currency. D. Member nations are required to have a common monetary and fiscal policy. E. Member nations are required to have a central political apparatus that coordinates economic, social, and foreign policy.
B. Each member country is allowed to determine its own trade policies with regard to nonmembers.
Which of the following institutions has a monopoly in proposing European Union legislation? A. Council of the European Union B. Court of Justice C. European Commission D. European Parliament E. European Community
C. European Commission
A key advantage of adopting the euro is that it: A. helps in reduction of competition in Europe. B. has prevented the development of a highly liquid pan-European capital market. C. lowers foreign exchange and hedging costs in Europe. D. insulates Europe from international competition. E. increases the range of investment options open to institutions only.
C. lowers foreign exchange and hedging costs in Europe.
Similarities in the underlying structure of economic activity make it feasible to adopt a single currency and use a single exchange rate as an instrument of macroeconomic policy in a(n): A. managed currency zone. B. open exchange regime. C. optimal currency area. D. free trade area. E. advanced monetary zone.
C. optimal currency area.
Which of the following is true of the euro since its establishment in 1999? A. The value of the euro has been stable against the U.S. dollar. B. The euro's value has steadily appreciated against the U.S. dollar. C. The euro's value initially appreciated and then steadily depreciated against the U.S. dollar. D. The euro has had a volatile trading history against the U.S. dollar. E. The value of the euro has been constant when compared to the U.S. dollar.
D. The euro has had a volatile trading history against the U.S. dollar.
Which of the following is the goal of the Caribbean Single Market and Economy? A. To remove all trade barriers between member nations in practice B. To establish a political union C. To adopt a common currency D. To harmonize macroeconomic and monetary policy between member-states E. To establish an economic union
D. To harmonize macroeconomic and monetary policy between member-states
Which of the following occurs when lower-cost external suppliers are replaced by higher-cost suppliers within a free trade area? A. Trade creation B. Strategic pricing C. Synergy D. Trade diversion E. Protectionism
D. Trade diversion
The European Council is considered to be the ultimate controlling authority within the European Union (EU) because: A. it monitors member-states to make sure they are complying with EU laws. B. it has a monopoly in proposing EU legislation. C. it has 754 members that are directly elected by the populations of the member-states. D. draft legislation from the European Commission can become EU law only if the council agrees. E. it is the supreme appeals court for EU law.
D. draft legislation from the European Commission can become EU law only if the council agrees.
Which of the following entails a closer economic integration and cooperation than a common market? A. Command economy B. Customs union C. Efficient market D. Free trade area E. Economic union
E. Economic union
Which of the following refers to an association of English-speaking Caribbean states that are attempting to establish a customs union? A. CARICOM B. Central American Free Trade Agreement C. Central American Common Market D. Free Trade Area of the Americas E. Caribbean Single Market and Economy
A. CARICOM
Which of the following refers to a trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, which began in the early 1960s but collapsed in 1969 due to war? A. Central American Common Market B. Free Trade Area of the Americas C. Caribbean Single Market and Economy D. Mercosur E. CARICOM
A. Central American Common Market
The agreement of the member-states of the Central American Common Market joined by the Dominican Republic to trade freely with the United States is known as the: A. Central American Free Trade Agreement. B. Central American Common Market. C. Free Trade Area of the Americas. D. CARICOM. E. Caribbean Single Market and Economy.
A. Central American Free Trade Agreement.
Which of the following proposed that all impediments to the formation of a single market be eliminated by December 31, 1992, resulting in the Single European Act? A. Delors Commission B. Andean Pact C. Treaty of Rome D. North American Free Trade Agreement E. Maastricht Treaty
A. Delors Commission
Which of the following meets in Strasbourg, France, is primarily a consultative rather than a legislative body, and debates legislation proposed by the commission and forwarded to it by the council? A. European Parliament B. European Central Bank C. Court of Justice D. European Free Trade Association E. European Community
A. European Parliament
Which of the following is defined as 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? A. Free trade area B. Command economy C. Efficient market D. Foreign exchange market E. Location economy
A. Free trade area
Which of the following is true of the East African Community (EAC)? A. Its program includes cooperation on immigration, road and telecommunication networks, investment, and capital markets. B. Its aim is to eliminate import tariffs among the six original members. C. It is the world's largest free trade area. D. It seeks to apply national environmental standards, provided such standards have a scientific basis. E. It seeks to protect intellectual property rights.
A. Its program includes cooperation on immigration, road and telecommunication networks, investment, and capital markets.
Which of the following is a drawback of adopting the euro? A. Loss of control over national monetary policy B. Increase in the cost of capital C. Reduction in the liquidity of capital markets D. Reduction of price differentials within the euro zone E. Loss of investment options open to both individuals and institutions
A. Loss of control over national monetary policy
Which of the following is the aim of the Central America Free Trade Agreement? A. Lowering of trade barriers between the United States and the Central American Common Market countries B. Elimination of trade barriers between the CARICOM and Central American Common Market countries C. Reduction of trade barriers between Caribbean Single Market and Economy nations and Central American Common Market countries D. Introduction of a common currency for Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua E. Reductions in tariffs and quotas between Costa Rica, Dominican Republic, and Nicaragua
A. Lowering of trade barriers between the United States and the Central American Common Market countries
The European Community became the European Union in 1993 following the ratification of the: A. Maastricht Treaty. B. Warsaw Pact. C. Treaty of Rome. D. Single European Act. E. Lisbon Treaty.
A. Maastricht Treaty.
Which of the following is true of the Andean Pact of 1969? A. Political and economic problems seem to have hindered cooperation among member countries of the Andean Pact. B. By the mid-1980s, the Andean Pact achieved most of its stated objectives. C. The dominant political ideology in many of the Andean countries tended toward the democratic end of the political spectrum. D. The Galápagos Declaration effectively replaced the Andean Pact in 1997. E. The Andean Pact sought to remove a common external tariff.
A. Political and economic problems seem to have hindered cooperation among member countries of the Andean Pact.
Which of the following refers to agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other? A. Regional economic integration B. Cross-cultural integration C. Zoning agreement D. Administrative trade policies E. Balance-of-trade equilibrium
A. Regional economic integration
Which of the following are significant trade blocs in Europe? A. The European Union and the European Free Trade Association B. The European Federation and the European Trade Block C. The European Commission and the COMINTERN D. The European Federation and the European Trade Association E. The European Economic Community and the European Federation
A. The European Union and the European Free Trade Association
Which of the following is true about the European Commission? A. The European Union's competition commissioner has been gaining influence as the chief regulator of competition policy in the member nations of the European Union. B. The European Commission has to be approved by the Council of the European Union before it can begin work. C. The European Commission does not have a policing role with respect to European Union laws. D. The legislation proposed by the European Commission goes directly to the European Parliament. E. The European Commission is the ultimate controlling authority within the European Union.
A. The European Union's competition commissioner has been gaining influence as the chief regulator of competition policy in the member nations of the European Union.
Which of the following treaties committed European Community members to adopt a common currency by January 1, 1999? A. The Maastricht Treaty B. The Treaty of Rome C. The Treaty of Lisbon D. The Montreal Treaty E. The Treaty of Paris
A. The Maastricht Treaty
Which of the following is a major obstacle to the establishment of the Free Trade Area of the Americas? A. The United States wants its southern neighbors to agree to tougher enforcement of intellectual property rights, which they do not want to embrace. B. Some constituent nations insist on a common currency, an initiative that has not found support among many nations. C. Brazil and Argentina want the United States to open up critical industries such as telecom and airlines. D. The major trading blocks in the region, NAFTA and Mercosur, have opposed its establishment. E. There is no consensus on trade policies between Brazil and Argentina.
A. The United States wants its southern neighbors to agree to tougher enforcement of intellectual property rights, which they do not want to embrace.
Which of the following is true with regard to the Asia-Pacific Economic Cooperation (APEC)? A. The stated aim of APEC is to increase multilateral cooperation in view of the economic rise of the Pacific nations. B. The goal of APEC is to reduce import tariffs among the six original members to zero. C. APEC is the world's largest free trade area. D. Collectively, the member-states account for about 85 percent of the world's GNP, 75 percent of world trade, and much of the growth in the world economy. E. APEC currently has 25 member-states, including such economic powerhouses as Germany, India, and Brazil.
A. The stated aim of APEC is to increase multilateral cooperation in view of the economic rise of the Pacific nations.
The Maastricht Treaty called for: A. establishment of the independent European Central Bank (ECB). B. the abolition of restrictions on cabotage. C. establishment of the European Parliament. D. the formation of a single market for the European Union. E. placing restrictions on foreign exchange transactions between member countries.
A. establishment of the independent European Central Bank (ECB).
A benefit of adopting the euro as a common currency is that it: A. makes it easier to compare prices across Europe. B. makes Europe an optimal currency area. C. increases the range of investment options open only to institutions. D. leads to higher prices, which translate into substantial gains for European producers. E. decreases competition because it has become harder for consumers to shop around.
A. makes it easier to compare prices across Europe.
The country of Argonia and the country of Berylia imposed tariffs on imports from all countries. They set up a free trade area, removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Argonia now begins to import sugar from Berylia. Previously, Argonia was indigenously producing sugar at a higher cost. Thus, Argonia benefits from this transaction. This is known as: A. trade creation B. strategic pricing C. synergy D. trade diversion E. protectionism
A. trade creation
Which of the following is responsible for proposing European Union legislation, implementing it, and monitoring compliance with European Union laws by member-states? A. Council of the European Union B. European Commission C. European Parliament D. Court of Justice E. European Community
B. European Commission
Which of the following countries has adopted the euro as its currency? A. Great Britain B. France C. Denmark D. Sweden E. Switzerland
B. France
Which of the following is a feature of a common market? A. Absence of a common external trade policy with regard to nonmembers B. Free movement of factors of production between member nations C. Establishment of barriers to the free flow of goods between member nations D. Lack of administrative machinery to oversee trade relations with nonmembers E. Mandatory use of a common currency among member nations
B. Free movement of factors of production between member nations
Which of the following is a threat facing the emergence of single markets? A. Getting engulfed in a trade war B. Increased price competition throughout the European Union C. Increase in price differentials across nations D. Reduced environmental standards in order to lure investments E. Overabundance of greenfield investments
B. Increased price competition throughout the European Union
Which of the following is true of the Treaty of Rome? A. It obliged all European Union members to adopt the euro. B. It committed the European Community to establish common policies in agriculture and transportation. C. It called for the establishment of internal trade barriers. D. It allowed members to determine the level of protection applied to goods coming from outside. E. It called for the abolition of a common external tariff.
B. It committed the European Community to establish common policies in agriculture and transportation.
Which of the following is true about the European Parliament? A. It cannot propose amendments to legislations. B. It is directly elected by the populations of the member-states. C. It is primarily a legislative body rather than a consultative body. D. It does not have the right to veto laws such as single-market legislation. E. The European Parliament does not have the right to vote on the appointment of commissioners.
B. It is directly elected by the populations of the member-states.
Which of the following is defined as a central political apparatus that coordinates the economic, social, and foreign policy of the member-states? A. Free trade area B. Political union C. Economic union D. Common market E. Command economy
B. Political union
Which of the following is a reason for Great Britain, Denmark, and Sweden to stay out of the euro zone? A. The dollar peg advocated by some members of the European Union B. The implied loss of national sovereignty to the European Central Bank C. The volatility of the euro D. The reluctance to compete directly against the U.S. dollar E. The reluctance to be considered an optimal currency area
B. The implied loss of national sovereignty to the European Central Bank
Which of the following is a major consideration that underlay the establishment of the European Community? A. The pressing need to have a common currency that would make trade between European and non-European countries easier B. The need for a united Europe to deal with the United States and the politically alien Soviet Union C. The economic lessons from the Great Depression that hit the United States in the 1920s D. The success of the European Free Trade Association formed by Western European countries in 1960 E. The rise of communism in Europe in the 1960s
B. The need for a united Europe to deal with the United States and the politically alien Soviet Union
An argument against the North American Free Trade Agreement centered on the fear that ratification would result in: A. low interest rates in the Unites States and Canada. B. mass exodus of jobs from the United States into Mexico. C. a move toward a common currency for NAFTA member nations. D. competition from the members of the European Union. E. high inflation in the United States and Canada.
B. mass exodus of jobs from the United States into Mexico.
A regional free trade agreement will benefit the world only if: A. it raises the standard of living in one of the member countries. B. the amount of trade it creates exceeds the amount it diverts. C. the currencies of the nations involved appreciate. D. the balance-of-trade situation remains stable in the region. E. it creates trade surplus for one of the countries involved.
B. the amount of trade it creates exceeds the amount it diverts.
Which of the following has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members? A. Command economy B. Customs union C. Common market D. Efficient market E. Free trade area
C. Common market
Which of the following supports the economic case for regional economic integration? A. International institutions such as the World Trade Organization have been moving the world away from a free trade regime. B. The greater the number of countries involved in a free trade agreement, the fewer the perspectives that must be reconciled. C. Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement. D. It is difficult to establish a free trade and investment regime among a limited number of adjacent countries as compared to the world community. E. Since most governments do not intervene, unrestricted free trade and FDI have become a reality.
C. Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement.
Which of the following are the two impediments to regional economic integration? A. Labor activism and political ideologies B. Immigration and political ideologies C. Costs and national sovereignty D. Political will and popular support E. Political ideologies and international policies
C. Costs and national sovereignty
Which of the following is considered to be the ultimate controlling authority within the European Union? A. Court of Justice B. European Commission C. European Council D. European Parliament E. European Community
C. European Council
Which of the following is true of the Treaty of Lisbon that was signed in 2007? A. It defined the European Commission's role in competition policy. B. It brought the commission to the court for failure to act according to a European Union treaty. C. It created the position of the president of the European Council. D. It lifted barriers to competition in the retail banking and insurance businesses. E. It created the Court of Justice, the supreme appeals court for European Union law.
C. It created the position of the president of the European Council.
Which of the following is a significant impact of the North American Free Trade Agreement (NAFTA)? A. It led to decreased economic stability in Canada. B. It led to a major trade deficit for Canada. C. It helped create the background for increased political stability in Mexico. D. It led to a trade surplus for all the three member nations. E. It led to a reduction in purchasing power of consumers in America.
C. It helped create the background for increased political stability in Mexico.
Which of the following is true with regard to an economic union? A. There are restrictions on immigration, emigration, or cross-border flow of capital among member countries. B. It entails less economic integration and cooperation than a common market. C. It involves the free flow of products and factors of production among member countries. D. It is defined as a central political apparatus that coordinates the economic, social, and foreign policy of the member-states. E. It does not adopt a common external trade policy.
C. It involves the free flow of products and factors of production among member countries.
Which of the following is true of the Court of Justice? A. The judges are required to act as representatives of national interests. B. It comprises several judges from a few selected countries. C. It is the supreme appeals court for European Union law. D. A member country cannot bring another member country to this court. E. Member countries cannot bring the commission or the council to this court.
C. It is the supreme appeals court for European Union law.
Which of the following is true of the Asia-Pacific Economic Cooperation (APEC)? A. It does not include the United States, Japan, and China. B. The meeting of APEC members in Seattle in 1993 led to greater economic integration. C. It was founded in 1990 at the suggestion of Australia. D. APEC members signed a free trade agreement with China that removes tariffs on 90 percent of traded goods. E. APEC members have established a free trade zone.
C. It was founded in 1990 at the suggestion of Australia.
Which of the following refers to a pact that originated in 1988 to establish a free trade area now including Argentina, Brazil, Paraguay, and Uruguay? A. ASEAN B. NAFTA C. Mercosur D. CARICOM E. CAFTA
C. Mercosur
Which of the following is true with regard to regional economic integration? A. Agreements designed to promote freer trade within regions have failed to produce gains from trade for all member countries. B. World Trade Organization members are not required to notify the organization of any regional trade agreements in which they participate. C. Regional economic integration is good for consumers because it lowers prices. D. Regional economic integration benefits producers because they do not have to adapt to a more competitive environment. E. The movement toward regional economic integration has been most successful in Asia.
C. Regional economic integration is good for consumers because it lowers prices.
Which of the following comprises the euro zone? A. The 27 member nations of the European Union B. The member nations of the European Union and the applicants to the union C. The 18 member nations who use the euro as their currency D. The member nations of the European Union and countries who have pegged their currencies to the euro E. The 21 member nations that have their members in the European Parliament
C. The 18 member nations who use the euro as their currency
Which of the following is true of the criteria to qualify for membership to the European Union? A. The applicants were not required to privatize state assets. B. The applicants were not required to adopt EU laws. C. The applicants were required to tame inflation. D. The applicants were required to refrain from restructuring industries. E. The applicants were required to prevent deregulation of markets.
C. The applicants were required to tame inflation.
Which of the following is a factor that resulted in the establishment of the European Union (EU)? A. The spectacular success of the North American Free Trade Agreement (NAFTA) B. The trade impasse following the oil crisis in the 1970s that occurred due to collusion among oil producing nations C. The devastation of Western Europe during two world wars and the desire for a lasting peace D. The emergence of Japan as an economic and industrial superpower despite the nuclear holocaust E. The rise of communism in Europe
C. The devastation of Western Europe during two world wars and the desire for a lasting peace
Which of the following occurs when high-cost domestic producers are replaced by low-cost producers within a free trade area? A. Value creation B. Strategic pricing C. Trade creation D. Trade diversion E. Economic exposure
C. Trade creation
Which of the following led to the collapse of the Central American Common Market in 1969? A. Devaluation of the Brazilian currency by 40 percent B. A coup in Nicaragua that led to the overthrow of the incumbent regime C. War between Honduras and El Salvador after a riot at a soccer match between teams from the two countries D. Withdrawal from the trade arrangement by Costa Rica E. Collapse of monetary policy between Costa Rica and El Salvador
C. War between Honduras and El Salvador after a riot at a soccer match between teams from the two countries
Over time the euro will impact the pan-European capital market by leading to: A. an increase in the cost of capital. B. a decline in the overall level of savings and investment. C. an increased efficiency with which investment funds are allocated. D. reduced liquidity in the market. E. reduced competition among European producers.
C. an increased efficiency with which investment funds are allocated.
The Andean Community now operates as a(n): A. common market. B. economic union. C. customs union. D. command economy. E. political union.
C. customs union.
Which of the following was a change proposed by the Single European Act? A. Establish frontier controls among European Community countries B. Increase the resources required for complying with trade bureaucracy C. Place barriers to competition in the retail banking and insurance businesses D. Apply the principle of "mutual recognition" to product standards E. Reduce costs directly by not allowing lower-cost suppliers into national economies
D. Apply the principle of "mutual recognition" to product standards
Which of the following refers to an attempt to establish a free trade area between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam? A. Asia-Pacific Economic Cooperation B. South Asian Association for Regional Cooperation C. Asian Clearing Union D. Association of Southeast Asian Nations E. Maastricht Treaty
D. Association of Southeast Asian Nations
Which of the following is true of the political case for regional economic integration? A. Linking neighboring economies increases the potential for violent conflict. B. Free trade stimulates economic growth, which creates dynamic gains from trade. C. Making neighboring economies increasingly dependent on each other fails to create incentives for political cooperation. D. Countries can enhance their political weight in the world by grouping their economies. E. Those who have sought a united Europe have always had a desire to make another war in Europe imminent.
D. Countries can enhance their political weight in the world by grouping their economies.
Which of the following levels of economic integration involves the use of a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy? A. Free trade area B. Customs union C. Common market D. Economic union E. Command economy
D. Economic union
Where has the movement toward regional economic integration been most successful? A. Africa B. South America C. North America D. Europe E. Asia
D. Europe
Which of the following has 754 members as of 2014, and is directly elected by the populations of the member-states? A. Court of Justice B. European Council C. European Commission D. European Parliament E. European Community
D. European Parliament
Which of the following refers to a permanent bailout fund, worth about €500 billion, set up by the euro zone nations to restore confidence in the euro? A. European Fiscal Union B. European Fiscal Compact C. Troubled Assets Relief Program D. European Stability Mechanism E. European Financial Stability Facility
D. European Stability Mechanism
Which of the following is a major issue confronting the North American Free Trade Agreement? A. Economic stability B. Reduction in purchasing power C. Political stability D. Expanding the membership of the agreement E. Lack of resources
D. Expanding the membership of the agreement
Which of the following are the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements? A. Licensing agreements B. Economic unions C. Common markets D. Free trade agreements E. Political unions
D. Free trade agreements
Which of the following is an example of concerns over national sovereignty acting as an impediment to regional economic integration? A. The Organization of the Petroleum Exporting Countries regulating the supply of petroleum as a cartel B. The Asia-Pacific Economic Cooperation failing to establish itself as a regional arrangement C. Admission of Eastern European nations into the European Union D. Great Britain refusing to adopt the common currency of the European Union, the euro E. The rise of the World Trade Organization
D. Great Britain refusing to adopt the common currency of the European Union, the euro
Which of the following is true of Alexander Yeats's criticism of the Andean Pact? A. He pointed out that the slowest growing items in intra-Mercosur trade were cars, buses, agricultural equipment, and other capital-intensive goods. B. He believed that the trade creation effects of Mercosur outweighed its trade diversion effects. C. He felt that Mercosur countries were prepared to compete globally once the group's external trade barriers came down. D. He pointed out that Mercosur countries were insulated from outside competition by tariffs that run as high as 70 percent of value. E. He felt that capital was being drawn toward more efficient enterprises.
D. He pointed out that Mercosur countries were insulated from outside competition by tariffs that run as high as 70 percent of value.
Which of the following is true of the Single European Act? A. It proposed to place frontier controls among European Community countries. B. It sought to abolish the application of the principle of "mutual recognition" to product standards. C. It proposed to reduce costs indirectly by preventing national suppliers to compete. D. It provided the impetus for the restructuring of substantial sections of European industry. E. It proposed to reduce costs directly by preventing lower-cost suppliers into national economies.
D. It provided the impetus for the restructuring of substantial sections of European industry.
Which of the following is true of the provisions of the North American Free Trade Agreement? A. It does not allow financial institutions unrestricted access to the Mexican market. B. It abolishes special treatment (protection) given to Mexican energy and railway industries. C. It allows lowering of national environmental standards to lure investment. D. It seeks the removal of most barriers on the cross-border flow of services. E. It does not deal with the protection of intellectual property rights.
D. It seeks the removal of most barriers on the cross-border flow of services.
Which of the following is true of the European Free Trade Association (EFTA)? A. The emphasis of EFTA has been on free trade in agricultural goods. B. Industrial goods were left out of the trade arrangement, each member being allowed to determine its own level of support. C. Members cannot determine the level of protection applied to goods coming from outside EFTA. D. It was founded by those western European countries that initially decided not to be part of the European Community. E. It imposes a common tariff, of 5 to 20 percent, on products imported from outside.
D. It was founded by those western European countries that initially decided not to be part of the European Community.
The European Community was established with the signing in 1957 of the Treaty of: A. Paris. B. Brussels. C. Switzerland. D. Rome. E. Lisbon.
D. Rome.
Which of the following is true of the Andean Pact during the mid-1980s? A. Tariff-free trade existed between member countries. B. Harmonization of economic policies between member countries had been achieved. C. Successful integration of member economies had been achieved. D. The Pact had failed to achieve the objective of a common external tariff. E. The dominant political ideology in many of the Andean countries tended toward democracy.
D. The Pact had failed to achieve the objective of a common external tariff.
Establishment of the euro required participating national governments to: A. have a sound fiscal situation. B. have stable exchange rates. C. be democratic in nature. D. give up control over monetary policy. E. have a high degree of price stability.
D. give up control over monetary policy.
Suppose the country of Ceria and Lithinia imposed tariffs on imports from all countries, and then they set up a free trade area, scrapping all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Now, Ceria begins to import sugar from Lithinia. However, Ceria had previously been importing sugar from another country, Cadnia, which produced sugar more cheaply than Ceria or Lithinia. This is known as: A. trade creation B. strategic pricing C. synergy D. trade diversion E. protectionism
D. trade diversion
Which of the following is an expected consequence of the implementation of the North American Free Trade Agreement? A. Low-skilled jobs will be moved out to Mexico resulting in lowering of average wage rates in the United States and Canada. B. Increased imports from Mexico will help reduce the huge trade deficit for United States and Canada. C. Lower incomes of the Mexicans would allow them to import fewer U.S. and Canadian goods, thereby decreasing demand. D. A large number of Mexican firms will hire low-skilled workers from the United States. E. Some U.S. and Canadian firms would move production to Mexico to take advantage of lower labor costs.
E. Some U.S. and Canadian firms would move production to Mexico to take advantage of lower labor costs.
