International Business chapter 9

country A and country B entered into a free trade agreement recently. after this, country A started importing heavy machinery from country B which country A had previously produced domestically at a higher cost. which of the following has occurred in this scenario

trade creation occurs when high-cost domestic producers are replaced by low-cost producers within the free trade are.

True or false: while a nation as a whole may benefit significantly from a regional free trade agreement, certaingroups withing the country may lose

true, while a nation may benefit significantly from a regional free trade agreement, certaain groups may lose, at least in the short to medium term. for example due to the establishment of NAFTA, some canadian and US workers in such industries as textiles which employ low cost, low skilled labor lost their jobs as canadian and us firms moved production to mexico

which regional trade bloc includes kenya uganda and tanzania

EAC they are member states of the East African Community trade bloc

true or false the emergence of single markets will make the business environment within each grouping less competitive

False just as the emergence of single markets created opportunities for business, it also presents a number of threats. for one thing, the business environment within each grouping will become more competitive.

true or false: the European parliament is the primary legislative body within the European union

False the european parliament is primarily a consultative rather than a legislative body.

True or false: trade diversion occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area

False trade creation occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area.

to achieve full economic union the european union introduced a common currency, the euro contrulled by a central EU bank. although most member states have signed on, _____ opposed this policy and later voted to leave the EU

Great Britain

True or false: the movement toward tegional economic integration has been most ambitious in europe

True nowhere has the movement toward regional economic integration been more ambitious than in europe

the EU began as a _____ which eliminated trade barriers between member countries and adopts a common external trade policy, but does not allow free movement of factors of production between member nations

customs union

identify the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements.

free trade areas; all barriers to the trade of goods and services among member countries are removed

initially, the andean community struggled, but in the late 1980's this trend started to reverse when

governments of latin america began to adopt free market economic policies.

The basic objective of ASEAN is to foster freer trade among member countires and to achieve cooperation in their industrial policies. The progress of ASEAN is best described as

limited

Regional economic integration offers significant opportunities for businesses. which of the following is one of these opportunities

markets that were formerly protected from foreign competition are increasingly open and the cost of doing business have fallen.

True or False: there is consensus that the EU is what economists would call an optimal currency area.

False: according to critics, a drawback of the euro is that the EU is not an optimal currency area because many of the european economies in the euro zone are very dissimilar.

true or false: in a free trade area, countries are not allowed to determine their own trade policies with nonmembers.

False: each country is allowed to determine its own trade policies with regard to nonmembers. Thus, for example the tariffs placed on the products of nonmember countries may bery from member to member.

when higher-cost external producers are replaced by lower-cost external producers within the free trade area, ____ occurs.

Trade creation

one of the impediments to integration arises from

concerns over national sovereignty despite the strong economic and political arguments in support, integration has never been easy to achieve or sustain for two main reasons. first, although economic integration aids the majority, it has its costs. while a nation as a ehole may benefit significantly from a regional free trade agreement, certain groups may lose. moving to a free trade regime involves painful adjustments. a second impediment to integration arises from concerns over national sovereignty

When Norway, Iceland, Liechtenstein, and switzerland established the EFTA, all barriers to the free flow of goods and servies between the countries were removed. member nations were allowed to determine the level of trade protection for goods coming from all other nations. what level of economic integration does this represent

free trade area

what is the ultimate controlling authority within the EU because it has the power to turn legislation into law?

the European Council

which statement characterizes the effect that the creation of a single market has had on business

the business environment within each single market has become more competitive. the lowering of barriers to trade and investment among countries has led to increased price competition throughout the EU and NAFTA/USMCA.