International business chapter 9

Free trade agreements account for nearly ____ of regional economic agreements. Multiple choice question.

90%

Which level of economic integration is present in an agreement that has no barriers to trade among member countries and allows factors of production (such as labor) to move freely among the members?

A common market

Which level of economic integration is present in an agreement that has no barriers to trade among member countries and allows factors of production (such as labor) to move freely among the members? Multiple choice question.

A common market

What are two impediments to establishing economic integration?

Costs of integration Concerns over national sovereignty

What are two methods a country would use to achieve economic integration?

Economic union Common market

Which organization is playing an emerging role in competition policy within the EU and serves as a potential threat to companies wishing to do business there?

European Commission

Identify the two reasons that the EU is NOT considered a perfect economic union. (Check all that apply.)

Not all markets are fully deregulated. There is a difference in tax rates across the countries.

What are two potential problems with an economic union?

There is a surrender of some national sovereignty. It requires a coordinating bureaucracy.

What are two reasons for a customs union being put in place?

To eliminate trade barriers between member countries To establish a common external trade policy

The European Commission, to maintain the level of competition in the EU, is increasingly willing to impose conditions on businesses before allowing

a merger or acquisition.

While the EU is seen as an economic union, it is considered imperfect because not all members of the EU have

adopted the same currency.

A(n) ______ allows the free movement of factors of productions among member countries, eliminates trade barriers among member countries, and has a common external trade policy.

common market

With the increase in single regional markets, managers must continually monitor for threats, including that the business environment within each grouping has become more

competitive.

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

costs

In moving toward economic and political integration, a(n) ______ union removes trade barriers among member nations and establishes a common trade policy for nonmembers.

customs

A(n) ______ union adds more economic integration to a common market by requiring a common currency, a common monetary and fiscal policy, and harmonization of tax rates.

economic

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

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

free trade area.

The least integrated form of economic integration is a

free trade area.

There has been a(n) _____ in regional economic integration in the past two decades

increase

Based on economic theories, free trade is viewed as a ______ as all participating nations stand to gain.

positive-sum game

Economic theories suggest that free trade allows countries to

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

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 US and Canadian workers in the ______ industry following the establishment of NAFTA.

textile

What are two potential threats to firms outside of a trading block such as the EU?

those firms might be shut out of the market by a "trade fortress" those firms would face likely long-term improvement in the competitive position of firms within the market

Some economists argue that regional free trade agreements will provide global benefits only if

trade creation exceeds trade diversion.