MKT 320 Chapter 3

Despite trade agreements, attempts to achieve integration in Central America have been described as uncoordinated, inefficient, and costly. There are still tariffs on imports of sugar, coffee, and alcoholic beverages.

TRUE

Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA.

TRUE

In October 2011, the United States Congress finally ratified the long-delayed free trade areas with South Korea, Panama, and Colombia.

TRUE

In a Common Market there are no internal barriers to trade, and it allows for free movement of factors of production such as labor and capital.

TRUE

In spite of NAFTA creating a free trade area, Mexican avocado growers can ship their fruit to the United States only during the winter months, and only to states in the northeast subject to a quota of $30 million worth of avocados per year.

TRUE

The WTO's neutral trade experts also serve as mediators in global trade disputes.

TRUE

Under Economic Union, a doctor or lawyer qualified in one country can practice in another member country.

TRUE

56) The original six members of the ASEAN (Association of Southeast Asian Nations) included all of the following countries except: A) Singapore. B) Thailand. C) India. D) Philippines. E) Brunei.

C) India.

60) Which of the following ASEAN countries ranks number one in terms of two-way trade with the United States? A) Brunei B) Malaysia C) Singapore D) Thailand E) Vietnam

C) Singapore

18) Competing ideologies in South America help explain why intraregional trade is yielding more benefits.

FALSE

73) A key word(s) in conducting business in the Middle East is: A) Arab Spring. B) Connection. C) Discrimination. D) Male dominance. E) haggling.

B) Connection.

32) The World Trade Organization, which came into existence on January 1, 1995, is the successor of another organization with the abbreviation: A) DSB. B) GATT. C) FTAA. D) NAFTA. E) ASEAN.

B) GATT.

52) About 70% of Ecuador's flower harvest is exported to: A) Bolivia. B) the United States. C) Colombia. D) Peru. E) Venezuela

B) the United States

72) The Gulf Cooperation Council (GCC) includes all of the following countries except: A) Kuwait. B) Saudi Arabia. C) Iraq. D) Bahrain. E) Oman.

C) Iraq.

34) Trade ministers representing the WTO member nations meet ________ to work on improving world trade. A) weekly B) monthly C) annually D) biannually E) fortnightly

C) annually

48) Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA that includes all SICA members except: A) Honduras. B) Guatemala. C) Nicaragua. D) Panama. E) Costa Rica.

D) Panama.

66) Management strategic options pertaining to products that are facilitated by a single European market include: A) standardized packaging and labeling. B) consolidated production. C) shift from brand to benefit segmentation. D) seeking marketing economies. E) all of the above

E) all of the above

67) Because they are in transition, the markets of Central and Eastern Europe present interesting opportunities and challenges which include: A) new source of growth. B) first mover advantage. C) exporting as an entry mode. D) lower wage rate. E) all of the above

E) all of the above

A free trade area represents the most fully developed form of preferential trade agreement among nations.

FALSE

17) About one-fourth of the cut roses sold in the United States come from Ecuador.

TRUE

30) The Middle East and North Africa are sometimes viewed as a regional entity known as "Mena."

TRUE

78) African companies will find it easier to gain access to financing from the U.S. Export-Import Bank due to: A) AGOA. B) GATT. C) SADC. D) TDCA. E) SACU.

A) AGOA.

51) The country that withdrew from the original members of the Andean Community is: A) Bolivia. B) Chile. C) Ecuador. D) Peru. E) Venezuela.

B) Chile.

75) The Middle East and North Africa are sometimes viewed as a regional entity referred to as: A) GCC. B) AMU. C) MENA. D) ACC. E) ECOWAS.

C) MENA.

76) In recent years, the economy of selected countries in ECOWAS has improved except in: A) Ivory Coast. B) Ghana. C) Benin. D) Sierra Leone. E) Nigeria.

D) Sierra Leone.

21) CARICOM's main objective has been to achieve a deepening of economic integration by means of a Caribbean common market.

TRUE

27) Coca-Cola had to delay launching its Powerade sports drink in Europe due to the lack of uniform food safety laws in the European Union.

TRUE

5) A preferential trade agreement is a mechanism that confirms special treatment on select trading partners, thereby at times discriminating against other trading partners.

TRUE

57) Which one of the ASEAN members has the World's second-largest container port? A) Singapore B) Thailand C) India D) Philippines E) Brunei

A) Singapore

62) The introduction of the euro by EU resulted in multifaceted advantages which include: A) elimination of costs associated with currency conversion. B) fixed exchange rate worldwide. C) elimination of paper currency and coins. D) withdrawal of French Francs from circulation. E) a choice for using local or European currency.

A) elimination of costs associated with currency conversion.

39) As a result of CFTA, the U.S. automakers participate in the Canadian auto market, thereby benefiting due to: A) greater economies of scale. B) decreased production costs. C) reduced competition. D) ease of exporting automobiles. E) creating a continental demand.

A) greater economies of scale.

40) Custom unions or a common market does not create a free trade area as compared to NAFTA due to: A) no common external tariffs. B) decreased production costs. C) reduced competition. D) ease of exporting commodities. E) creation of a continental demand.

A) no common external tariffs.

38) A true economic union requires: A) political unity. B) social services. C) welfare. D) regional development. E) taxation.

A) political unity.

50) Considering the progress, attempts to achieve integration in Central America has been described as: A) uncoordinated. B) coordinated. C) efficient. D) costly. E) productive.

A) uncoordinated.

54) Argentina provides a good example of how a country can emerge from an economic crisis as a stronger global competitor as per the following statement: A) Argentina reduced the duties on consumer goods. B) Argentina devalued its currency for exports and capital transactions. C) Argentina added tariffs on imported wines. D) Argentina adopted the U.S. dollar as official currency. E) Argentina added tariffs on wine produced within the country.

B) Argentina devalued its currency for exports and capital transactions.

77) In order to form a free trade area, South Africa has signed a Trade, Development, and Cooperation Agreement (TDCA) with: A) Swaziland. B) EU. C) Namibia. D) Angola. E) Japan.

B) EU.

64) The new country joining the EU at the beginning of 2014 is: A) Slovakia. B) Estonia. C) Latvia. D) Slovenia. E) Cyprus.

B) Estonia.

53) The "Common Market of the South" in Latin America is used to describe: A) SICA. B) Mercosur. C) Andean Community. D) CARICOM. E) FTAA.

B) Mercosur.

42) NAFTA creates a free trade area in North America. However, Mexican avocado growers: A) cannot hire illegal immigrants. B) can only ship avocados to the United States in winter months. C) have no quotas for the quantity of avocados shipped to the United States. D) cannot impose tariffs of their own. E) None of the above

B) can only ship avocados to the United States in winter months.

44) The allure of the Latin American market has been its: A) lack of inflation. B) considerable size. C) rapid economic growth. D) low foreign debts. E) protectionism.

B) considerable size.

61) The Maastricht Treaty called for: A) the creation of an Asia Free Trade Area (AFTA). B) the creation of an economic and monetary union in Europe. C) Chile's acceptance into Mercosur. D) the purchase of CDs and tapes from distributors in Europe. E) the creation of the seven-nation European Free Trade Association (EFTA).

B) the creation of an economic and monetary union in Europe.

43) NAFTA creates a free trade area, as opposed to a customs union or a common market, due to the fact that: A) the agreement does not leave the door open for discretionary protectionism. B) the governments of all three nations decided to eliminate tariffs. C) the issue of illegal immigration from Mexico to the United States is resolved. D) restrictions are imposed on the use of goods, services, and investments. E) restrictions are imposed on labor movements among members.

B) the governments of all three nations decided to eliminate tariffs.

36) ________ builds upon the elimination of internal tariff barriers, the establishment of common external barriers, and the free flow of factors. A) European Union B) Economic union C) Customs union D) Free trade area E) Common market

C) Customs union

35) The form of economic cooperation that calls for 1) eliminating internal barriers to trade and 2) establishing common external barriers is known as a(n): A) European Union. B) Economic union. C) Customs union. D) Free trade area. E) Common market.

C) Customs union.

41) The form of economic cooperation that calls for countries to eliminate all internal barriers to trade among themselves even while maintaining independent trade policies vis-à-vis third countries is known as a(n): A) Economic union. B) Customs union. C) Free trade area. D) Common market. E) None of the above

C) Free trade area.

59) For the past 40 years Bhutan, a kingdom of 700,000 people in the Himalaya mountains, has relied on the following measure: A) GNI. B) GDP. C) GNH. D) GNP. E) GTE.

C) GNH.

49) The Secretariat for Central American Integration is headquartered in: A) El Salvador. B) Honduras. C) Guatemala City. D) Nicaragua. E) Costa Rica.

C) Guatemala City.

70) With the global economic crisis as a backdrop, the first-ever Happiness Congress was held in: A) Sweden. B) Austria. C) Spain. D) Italy. E) Greece.

C) Spain.

71) Political and social instability in the Middle Eastern region can primarily be attributed to: A) desert conditions and lack of agricultural land. B) cultural differences among nations. C) a wide gap between rich and poor nations due to oil revenues. D) lack of water purification facilities. E) the "Arab Spring."

C) a wide gap between rich and poor nations due to oil revenues.

58) There are barriers in Japan for global marketers in terms of attitudes as well as laws. Barriers include all of the following except: A) any organization wishing to compete in Japan must be committed to providing top-quality products and services. B) repeat visits and extended socialization with distributors. C) goods marketed should have a semblance of western products and services. D) marketers must master the keiretsu system of tightly knit corporate alliances. E) trust has to be built before conducting successful business.

C) goods marketed should have a semblance of western products and services.

68) The enlargement of the EU has impacted marketing strategies in the Eurozone countries by: A) making it difficult to export food products from one country to another. B) increasing the cost of production since the euro replaced local currency. C) shifting products from one market to another in the event of shortages. D) reduced tariffs and quotas for products imported from non-EU members. E) having less flexibility in the placement of factories.

C) shifting products from one market to another in the event of shortages.

80) The reason why Greece, Ireland, Portugal, and Spain sometimes are referred to as the eurozone's "peripheral countries" is: A) that all have tourist attractions. B) that they are situated in the peripheral parts of Europe. C) that they all rank lower than their EU neighbors in terms of infrastructure. D) that they are riding on the way of technology boom. E) that they are all marred by sex scandals.

C) that they all rank lower than their EU neighbors in terms of infrastructure.

55) The English-speaking CARICOM members in the eastern Caribbean are concerned with defending their privileged trading position with: A) Russia. B) China. C) the United States. D) the United Kingdom. E) Australia.

C) the United States.

74) In spite of having about 45% of the world's known oil reserves, Saudi Arabia and other Middle Eastern countries post current-account deficits, largely because: A) of poor accounting practices. B) of vast economic diversification. C) they must import most of the goods and services. D) most of the oil is exported. E) new businesses are being developed.

C) they must import most of the goods and services.

69) The markets of Central and Eastern Europe present interesting opportunities and offer attractive locations for low-cost manufacturing due to: A) their location being close to the sea. B) the cultural similarities. C) wage rates being lower than in Spain, Portugal and Greece. D) strict laws and regulations. E) prohibitive tariffs and export restrictions.

C) wage rates being lower than in Spain, Portugal and Greece.

33) Which form of regional cooperation agreement, when fully implemented, entails creation of a unified central bank, the use of a single currency, and common policies on agriculture, social services and welfare? A) Free trade area B) Customs union C) Common market D) Economic union E) Dispute settlement body

D) Economic union

79) Other than tariffs, there are certain problems that restrict free trade between the European Union and the United States which includes all of the following except: A) use of genetically modified agricultural products. B) product labeling. C) Hollywood movie domination. D) Internet usage. E) cultural diversity.

D) Internet usage.

63) The non-EU member which uses the euro as its currency is: A) Estonia. B) Kosovo. C) Montenegro. D) Vatican City. E) San Marino.

D) Vatican City.

37) Arrange the following in order from lowest to highest level of economic integration. A) customs union→economic union→free trade area→common market B) economic union→customs union→common market→free trade area C) common market→free trade area→economic union→customs union D) free trade area→customs union→common market→economic union E) common market→economic union→customs union→free trade area

D) free trade area→customs union→common market→economic union

45) The most important preferential trading arrangements in Latin America do not include: A) SICA. B) the Andean Community. C) CARICOM. D) Mercosur. E) BRIC.

E) BRIC.

47) Which member of the Central American Integration System has both the largest economy and the largest population? A) El Salvador B) Honduras C) Guatemala D) Nicaragua E) Costa Rica

E) Costa Rica

46) The five original members of the Central American Integration System did not include: A) El Salvador. B) Honduras. C) Guatemala. D) Nicaragua. E) Venezuela.

E) Venezuela.

65) Markets of Central and Eastern Europe present interesting opportunities and challenges. Companies such as 3M International, McDonald's, Philips Electronics, and Henkel are moving into the region for all of the following reasons except: A) the region is an important new source of growth. B) that the first company to penetrate a country market often emerges as leader. C) wage rates are much lower than those in Spain, Portugal, and Greece. D) the region offers attractive locations for low-cost manufacturing. E) core products and Western brand names need changes to meet consumer demands.

E) core products and Western brand names need changes to meet consumer demands.

31) Before an agreement can be reached between the United States and European Union, major differences will have to be worked out. These differences include aspects related to all of the following except: A) agriculture. B) genetically modified crops. C) tariff reduction. D) cross-border investment. E) job creation.

E) job creation.

19) Mercosur or the Common Market of the South resulted from a treaty signed by four countries: Argentina, Brazil, Paraguay, and Venezuela.

FALSE

20) Chile decided to become only an associate member of Mercosur and hence participates in the free trade area aspect of Mercosur as well as the customs union.

FALSE

A Customs Union represents the most fully developed form of preferential trade agreement among nations.

FALSE

It is mandatory for countries to notify the WTO when they enter into preferential trade agreements.

FALSE

The five original members of the Central American Common Market (CACM) are El Salvador, Honduras, Guatemala, Panama, and Cost Rica.

FALSE

The ultimate goal of a free trade agreement is to have standardized duties on goods that cross borders between the partners.

FALSE

1) The United States and the EU have the world's largest trading relationship.

TRUE

2) GATT (General Agreement on Tariffs and Trade) itself had no enforcement power, and the losing party in a dispute was entitled to ignore the ruling.

TRUE

22) Individually and collectively, Association of Southeast Asian Nations (ASEAN) countries are active in regional and global trade.

TRUE

23) Since 2010 there is a formal establishment of a new China/ASEAN Free Trade Agreement.

TRUE

24) Singapore alone accounts for more than one-third of U.S. trading activities with ASEAN countries.

TRUE

25) Bhutan has relied on a measure besides economic growth referred to as the Gross National Happiness (GNH).

TRUE

26) The Vatican City uses the euro although it is not a part of the European Union.

TRUE

28) Movements such as "the Arab Spring" have forced some of the regional leaders to make economic and political concessions.

TRUE

29) The six countries in the Gulf Cooperation Council (GCC) hold about 45% of the world's known oil reserves, but production is only about 18% of world oil output.

TRUE

In addition to eliminating internal barriers to trade, members of a customs union agree to the establishment of common external tariffs.

TRUE