MGMT 425 - Exam 2 (Ch 9 Q)
How does the NAFTA seem to increase the international competitiveness of U.S. and Canadian firms?
It allows them to take advantage of lower labor costs in Mexico
Which of the following is seen as a benefit of the euro?
lower foreign exchange and hedging costs as well as currency volatility risk
Which of the following is seen as a disadvantage of the euro?
national authorities losing control over monetary policy
To ensure that a free trade agreement does not result in trade diversion, which of the following has to come within the scope of the WTO?
nontariff barriers
A political benefit of economic integration is that it
reduces the potential for violent conflict and war.
Three countries agree to remove barriers to trade between member countries and adopt a common external trade policy toward nonmembers. They also agree to allow people and other factors of production to move freely across their borders. Which level of economic integration is this an example of?
free trade area
From least integrated to most integrated, the levels of economic integration are a
free trade area, a customs union, a common market, an economic union, and a political union.
Firms outside of trading areas run the risk of being shut out of the single market by the creation of a
"trade fortress"
Which of the following, adopted by the member nations of the European Community in 1987, committed member countries to work toward the establishment of a single market by December 31, 1992?*
Single European Act
T or F: The European Union is an example of an economic union.
T
________ 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 common market
According to _____, the trade diversion effects of Mercosur outweigh its trade creation effects.
Alexander Yeats
Three long-term EU members, Great Britain, _____, and Sweden, have not adopted the euro.*
Denmark
Four main institutions make up the political structure of the EU. Which of them is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws?
European Commission
The emerging role of the _____ in competition policy suggests the EU is increasingly willing and able to intervene and impose conditions on companies proposing mergers and acquisitions.
European Commission
The _____ is primarily a consultative rather than legislative body.
European Parliament
The _____ is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states.***
European Parliament(commission)
T or F: The Treaty of Rome, signed in 1957, established the European Free Trade Association. **
False
Linking neighboring countries economically and making them interdependent
Linking neighboring countries economically and making them interdependent
Which of the following established the second largest currency zone in the world?*
Maastricht Treaty
Which of the following is a reason Turkey is not yet a member of the EU?
There are concerns over human rights issues in the country.
_____ occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area.
Trade Creation
_____ may also occur when higher-cost external producers are replaced by lower-cost external producers within the free trade area.
Trade diversion
The European Community was established by the
Treaty of Rome signed in 1957.
T or F: A benefit to companies of economic integration is the opportunity to centralize their production and reduce costs.
True
T or F: A central reason for the establishment of the EU was the devastation of Western Europe during two world wars and the desire for a lasting peace.
True
T or F: A key benefit resulting from the adoption of the euro is the ability to compare prices across member markets.
True
T or F: Political turmoil and tribalism in several African nations has persistently impeded any meaningful progress in economic integration.
True
T or F: The implied loss of national sovereignty to the European Central Bank (ECB) underlies the decision by Great Britain, Denmark, and Sweden to stay out of the euro zone for now.
True
Mercosur originated as _____ between Brazil and Argentina in 1988.
a free trade pact
In ____, 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.
an optimal currency area
Which of the following was required for new applicants to qualify for EU membership?
deregulation of markets
In 1990, Bolivia, Peru, Ecuador, Colombia, and Venezuela relaunched
the Andean Pact
Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than legislative body?
the European Parliament
