final exam ch 8

Which of the following is a result of trade creation? A) The demand for goods tends to increase. B) Purchasing power of consumers decreases. C) Consumers have a limited choice for selection of goods. D) Imported goods are seldom available at lower prices.

A

Which of the following treaties was signed by the members of the European Coal and Steel Community in 1957 for creating the European Economic Community? A) the Treaty of Rome B) the Maastricht Treaty C) the Treaty of Paris D) the Treaty of Versailles

A

While ________ encourages free trade among Canada, Mexico and the United States, manufacturers and distributors must abide by local content requirements and rules of origin. A) NAFTA B) LAFTA C) CAN D) CAFTA-DR

A

________ is an example of a free trade agreement. A) NAFTA B) Mercosur C) European Union D) APEC

A

A group of fifty-three nations on the African continent joined forces in 2002 to create the ________. A) Economic Community of West African States B) African Union C) African Unification Front D) Organization of the African Unity

B

Countries belonging to a ________ maintain whatever policies they see fit against nonmember countries. A) economic union B) customs union C) common market D) free trade area

D

Country X wants to encourage trade by eliminating trade barriers with the three countries along its borders. However, Country X wants each of the countries to be able to establish their own trade policies even though this may lead to problems with trade deflection. Which form of economic integration is Country X most likely considering? A) economic union B) common market C) customs union D) free trade area

D

A benefit of regional economic integration is that it always expands employment opportunities in all nations. T or F

F

A common market area is the greatest extent of national integration. T or F

F

A common market requires that member nations create a common currency. T or F

F

A political union makes it mandatory for nations to accept a common stance on all economic and political policies within their territories. T or F

F

Countries belonging to a free trade area must concede a certain amount of their national autonomy to the supranational union of which they are a part. T or F

F

A group of nations in a geographic region undergoing economic integration is called a regional trading bloc. T or F

T

A result of trade creation is that buyers pay lower prices for imported goods and services after trade barriers are removed. T or F

T

Canada and the United States are early examples of political unions. T or F

T

Economic integration can unintentionally reward a less efficient producer within a trading bloc. T or F

T

In regional economic integration, industries that require mostly unskilled labor tend to shift production to low-wage nations within a trading bloc. T or F

T

The Council of the European Union is the ________ body of the European Union. A) legislative B) executive C) judicial D) monitoring

A

The European Union is an example of ________ integration. A) regional B) relative C) global D) bilateral

A

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) European Monetary Union C) Single European Act D) Copenhagen Criteria

A

The main purpose of the ________ is to debate and amend legislation proposed by the European Commission of the EU. A) European Parliament B) Council of the European Union C) Court of Auditors D) Court of Justice

A

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

A

The process whereby countries in a geographic area cooperate with one another to reduce or eliminate barriers to the international flow of products, people, or capital is called ________. A) regional economic integration B) protectionism C) mercantilism D) economic nationalism

A

Which of the following countries of the Central American Common Market has adopted the U.S. dollar as its official currency? A) El Salvador B) Honduras C) Nicaragua D) Costa Rica

A

In a customs union, each country can maintain whatever policy it sees fit against nonmember countries T or F

F

Like the European Union commissioners, EU justices are required to act in the interest of their native countries. T or F

F

The European Free Trade Association focuses on trade only in consumer goods, and not in manufactured goods. T or F

F

The greatest benefit of regional integration is trade diversion. T or F

F

The primary purpose of the Gulf Cooperation Council (GCC) at its formation was to create a political union between Iraq and Iran. T or F

F

Today, the Southern Common Market acts as a political union. T or F

F

Trade agreements hinder competitors from other nations to enter the domestic market. T or F

F

Ombudsman and Data Protection Supervisor are the EU institutions that fulfill secondary and support roles. T or F

T

The Council of the European Union is the legislative body of the EU. T or F

T

The Court of Justice is the court of appeals of the European Union. T or F

T

The European Union (EU) and European Free Trade Association (EFTA) created the European Economic Area (EEA). T or F

T

The Maastricht Treaty called for political union of the member nations. T or F

T

The North American Free Trade Agreement membership includes Canada, Mexico, and the United States. T or F

T

The Southern Common Market is also referred to as MERCOSUR. T or F

T

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

T

The increase in the level of trade between nations that results from regional economic integration is called trade creation. T or F

T

The least amount of sovereignty that must be surrendered to a trading block occurs in a free trade agreement. T or F

T

The main difficulty CARICOM will continue to face is that most members trade more with nonmembers than they do with each other. T or F

T

The stated aim of Asia Pacific Economic Cooperation (APEC) is to strengthen the multilateral trading system. T or F

T

When trade diversion occurs, buyers will likely pay more for products. T or F

T

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) political union C) common market D) customs union

A

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

A

ALADI refers to the ________. A) Latin American Integration Association B) Association of Southeast Asian Nations C) Asia Pacific Economic Cooperation D) Latin American Free Trade Association

A

Country X advocates the greatest level of integration possible for the member nations of the Moonland Union. Which of the following is Country X most likely to support? A) political union B) free trade area C) customs union D) economic union

A

For countries to become members of the European Union, they have to meet certain demands laid down by the EU referred to as the ________. A) Copenhagen Criteria B) Closer Economic Relations Agreement C) Andean Community D) Euro-Plus Pact

A

No proposed legislation becomes EU law unless the ________ votes it into law. A) Council of the European Union B) European Parliament C) Court of Auditors D) European Commission

A

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

B

A(n) ________ requires member nations to harmonize their tax, monetary, and fiscal policies and create a common currency. A) customs union B) economic union C) free trade area D) common market

B

Country M wants member nations to harmonize their tax, monetary, and fiscal policies and wants to create a common currency. Country M is requesting for the creation of a(n) ________ in the Moonland nations. A) free trade area B) economic union C) customs union D) common market

B

Currently the most sophisticated and advanced example of regional integration is occurring in ________. A) Asia B) Europe C) North America D) Africa

B

In today's world, the Andean Community is best described as an incomplete ________. A) free-trade area B) customs union C) economic union D) political union

B

The Andean Community most closely resembles a(n) ________. A) economic union B) customs union C) common market D) political union

B

The Court of Justice is the ________ of the European Union. A) court of honor B) court of appeals C) small-claims court D) arbitral tribunal

B

The European Commission is the ________ body of the European Union. A) legislative B) executive C) financial D) monitoring

B

The European Union plan that established its own central bank and currency in January 1999 is known as the ________. A) Single European Act B) European Monetary Union C) Copenhagen Criteria D) Southern Common Market

B

The common market between Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua is referred to as the ________. A) Latin American Integration Association B) Central American Common Market C) Andean Community D) Southern Common Market

B

The major objective of the Association of Southeast Asian Nations (ASEAN) is to ________. A) approach the European Union to resolve disputes between member countries B) safeguard the region's economic and political stability C) introduce barriers to trade and investment D) increase members' tariff rates from an average of 7.5 percent to 15 percent

B

The regional trading bloc that Zucoland will be joining is most likely a(n) ________. A) economic union B) free trade area C) customs union D) political union

B

Which of the following is a potential drawback of regional economic integration? A) ethnocentricity B) trade diversion C) economic nationalism D) protectionism

B

Which of the following is best classified as an economic union? A) Southern Common Market (MERCOSUR) B) European Union (EU) C) North American Free Trade Agreement (NAFTA) D) Andean Community

B

Which of the following is part of ASEAN? A) Cuba B) Cambodia C) Peru D) Greenland

B

Which of the following is the greatest extent of regional economic integration? A) free trade area B) political union C) common market D) customs union

B

An increase in the level of trade among nations that results from regional economic integration is called ________. A) trade diversion B) mercantilism C) trade creation D) economic nationalism

C

Bolivia, Colombia, Ecuador, and Peru belong to the ________. A) Latin American Free Trade Association (LAFTA) B) Central American Common Market C) Andean Community D) Latin American Integration Association (ALADI)

C

Economic integration whereby countries remove barriers to trade and the movement of labor and capital among members, set a common trade policy against nonmembers, and coordinate their economic policies is called a(n) ________. A) customs union B) common market C) economic union D) free trade area

C

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

C

If these twenty-six nations continue to eliminate all barriers to trade among themselves and set a common trade policy against nonmembers, they would create a ________. A) free trade area B) preferential trading area C) customs union D) political union

C

In 1951, Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands signed the Treaty of Paris and created the ________. A) European Union B) European Economic Community C) European Coal and Steel Community D) European Community

C

In a(n) ________, members eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate barriers to the movement of the factors of production. A) free trade area B) customs union C) common market D) economic union

C

The European Free Trade Association was formed in 1960 to focus on trade in ________. A) consumer goods B) agricultural goods C) industrial goods D) services

C

The Free Trade Area of the Americas (FTAA) is a trade agreement ________. A) between Mexico, Canada, and the U.S. B) among the South American nations C) that has been proposed to create the largest free trade area on the planet D) that includes the United States and the European Union

C

The ________ is the common currency of the European Union. A) franc B) pound C) euro D) mar

C

The ________ was established in 2006 between the United States and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and later the Dominican Republic. A) NAFTA B) LAFTA C) CAFTA-DR D) CAN

C

The least amount of sovereignty that must be surrendered to a trading bloc occurs in a ________. A) economic union B) common market C) free trade area D) political union

C

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

C

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

C

The main objectives of the Andean Community include ________. A) introduction of tariffs for trade among member countries B) separate policies in both transportation and certain industries C) a common external tariff D) a common currency

C

Today, the Southern Common Market (MERCOSUR) acts as a(n) ________. A) economic union B) political union C) customs union D) preferential trading area

C

Which of the following institutions is least likely to play an important role in monitoring and enforcing economic and political integration in the European Union? A) European Parliament B) Council of the European Union C) European Court of Human Rights D) European Commission

C

Which of the following is an important goal of regional economic integration? A) to increase the selling prices of products B) to raise the living standards of people C) to limit the choice of products available to customers D) to establish a socialist government

C

Which of the following is currently a member of the European Free Trade Association? A) Slovakia B) Ireland C) Norway D) Italy

C

Which of the following is true of trade diversion? A) It increases the purchasing power of consumers. B) It increases the level of trade between nonmember nations. C) It generally increases the prices of products in a nation. D) It guarantees consumers a wider selection of goods

C

Which of the following materialized the EU's goals of removing trade barriers, increasing harmonization, and enhancing the competitiveness of European companies? A) the Maastricht Treaty B) the European Monetary Union C) the Single European Act D) the Copenhagen Criteria

C

Which of the following statements is true of NAFTA? A) It introduced a common currency for trade between the U.S., Mexico and Canada. B) It overrode the local content requirements and rules of origin for products manufactured in the member nations. C) It eliminated all tariffs and nontariff trade barriers on goods originating from within North America. D) It called for stringent rules regarding government procurement practices and the imposition of countervailing duties.

C

Which of the following would the government of Zucoland most likely experience as a benefit of joining the trading bloc? A) trade diversion B) increased national sovereignty C) greater consensus D) production shifts to low-wage nations

C

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

D

If all countries in the bloc are asked to give up the greatest amount of sovereignty, they would most likely be joining a(n) ________. A) economic union B) free trade area C) customs union D) political union

D

Regional economic integration is also referred to as ________. A) mercantilism B) nationalism C) protectionism D) regionalism

D

Scenario: Learning the Americas' Way The newly-formed countries that emerged after the break-up of the United Frontier States (UFS) are interested in learning more about integration in the Americas. Because the former UFS nations have many similarities with the countries of North and South America, they believe they can learn from the integration experience in the Americas. To that end, they pose the following questions. The regional trade agreement between Canada, Mexico, and the United States to eliminate tariffs and non-tariff barriers between themselves is known as the ________. A) Central American Free Trade Agreement B) Andean Community C) Caribbean Community and Common Market D) North American Free Trade Agreement

D

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. The process undertaken by these twenty-six countries is an example of ________. A) foreign direct investment B) protectionism C) economic nationalism D) regional economic integration

D

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) free trade area B) preferential trading area C) customs union D) common market

D

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

D

Which of the following countries is a member of the North American Free Trade Agreement (NAFTA)? A) Costa Rica B) Honduras C) Venezuela D) Canada

D

Which of the following statements about the euro is true? A) It was adopted by all existing EU members when it was first initiated. B) It must be adopted by countries as a precondition to joining the EU. C) It cannot be used by countries that are not members of the EU. D) It was designed to eliminate currency as a barrier to trade in the EU.

D

Which of the following would the government of Zucoland most likely experience as a benefit of joining the trading bloc? A) increased national sovereignty B) increased military security C) trade diversion D) higher-wage employment

D