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Q:
Which of the following is a major consideration that underlay the establishment of the European Community?
A.The pressing need to have a common currency that would make trade between European and non-European countries easier
B.The need for a united Europe to deal with the United States and the politically alien Soviet Union
C.The economic lessons from the Great Depression that hit the United States in the 1920s
D.The success of the European Free Trade Association formed by Western European countries in 1960
E.The rise of communism in Europe in the 1960s
Q:
Which of the following is true of the political case for regional economic integration?
A.Linking neighboring economies increases the potential for violent conflict.
B.Free trade stimulates economic growth, which creates dynamic gains from trade.
C.Making neighboring economies increasingly dependent on each other fails to create incentives for political cooperation.
D.Countries can enhance their political weight in the world by grouping their economies.
E.Those who have sought a united Europe have always had a desire to make another war in Europe imminent.
Q:
Which of the following supports the economic case for regional economic integration?
A.International institutions such as the World Trade Organization have been moving the world away from a free trade regime.
B.The greater the number of countries involved in a free trade agreement, the fewer the perspectives that must be reconciled.
C.Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement.
D.It is difficult to establish a free trade and investment regime among a limited number of adjacent countries as compared to the world community.
E.Since most governments do not intervene, unrestricted free trade and FDI have become a reality.
Q:
Which of the following is defined as a central political apparatus that coordinates the economic, social, and foreign policy of the member-states?
A.Free trade area
B.Political union
C.Economic union
D.Common market
E.Command economy
Q:
Establishment of which of the following would hold a coordinating bureaucracy accountable to the citizens of member nations?
A.A political union
B.A customs union
C.An exclusive economic zone
D.A free trade agreement
E.A common market
Q:
Which of the following is true with regard to an economic union?
A.There are restrictions on immigration, emigration, or cross-border flow of capital among member countries.
B.It entails less economic integration and cooperation than a common market.
C.It involves the free flow of products and factors of production among member countries.
D.It is defined as a central political apparatus that coordinates the economic, social, and foreign policy of the member-states.
E.It does not adopt a common external trade policy.
Q:
Which of the following levels of economic integration involves the use of a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy?
A.Free trade area
B.Customs union
C.Common market
D.Economic union
E.Command economy
Q:
Which of the following entails a closer economic integration and cooperation than a common market?
A.Command economy
B.Customs union
C.Efficient market
D.Free trade area
E.Economic union
Q:
Which of the following is a feature of a common market?
A.Absence of a common external trade policy with regard to nonmembers
B.Free movement of factors of production between member nations
C.Establishment of barriers to the free flow of goods between member nations
D.Lack of administrative machinery to oversee trade relations with nonmembers
E.Mandatory use of a common currency among member nations
Q:
Which of the following 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.Command economy
B.Customs union
C.Common market
D.Efficient market
E.Free trade area
Q:
Three countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common trade policy with regard to nonmembers. Faced with political backlash, the countries stop short of allowing mobility of factors of production such as labor and capital. Which of the following levels of economic integration best describes this arrangement?
A.Political union
B.Customs union
C.Common market
D.Economic union
E.Monetary union
Q:
Which of the following is true of the European Free Trade Association (EFTA)?
A.The emphasis of EFTA has been on free trade in agricultural goods.
B.Industrial goods were left out of the trade arrangement, each member being allowed to determine its own level of support.
C.Members cannot determine the level of protection applied to goods coming from outside EFTA.
D.It was founded by those western European countries that initially decided not to be part of the European Community.
E.It imposes a common tariff, of 5 to 20 percent, on products imported from outside.
Q:
Which of the following are the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements?
A.Licensing agreements
B.Economic unions
C.Common markets
D.Free trade agreements
E.Political unions
Q:
Which of the following is true with regard to a free trade area?
A.Factors of production are allowed to move freely between member nations.
B.Each member country is allowed to determine its own trade policies with regard to nonmembers.
C.Member nations are required to have a common currency.
D.Member nations are required to have a common monetary and fiscal policy.
E.Member nations are required to have a central political apparatus that coordinates economic, social, and foreign policy.
Q:
Which of the following is defined as a group of countries committed to removing all barriers to the free flow of goods and services between each other, but pursuing independent external trade policies?
A.Free trade area
B.Command economy
C.Efficient market
D.Foreign exchange market
E.Location economy
Q:
Which of the following is the economic level corresponding to the least integration?
A.A free trade area
B.A customs union
C.A common market
D.An economic union
E.A political union
Q:
Where has the movement toward regional economic integration been most successful?
A.Africa
B.South America
C.North America
D.Europe
E.Asia
Q:
Which of the following is true with regard to regional economic integration?
A.Agreements designed to promote freer trade within regions have failed to produce gains from trade for all member countries.
B.World Trade Organization members are not required to notify the organization of any regional trade agreements in which they participate.
C.Regional economic integration is good for consumers because it lowers prices.
D.Regional economic integration benefits producers because they do not have to adapt to a more competitive environment.
E.The movement toward regional economic integration has been most successful in Asia.
Q:
Which of the following refers to agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other?
A.Regional economic integration
B.Cross-cultural integration
C.Zoning agreement
D.Administrative trade policies
E.Balance-of-trade equilibrium
Q:
An advantage of the emergence of single markets is that the lowering of barriers to trade and investment among countries has led to decreased price competition throughout the European Union.
Q:
The creation of a single market through regional economic integration offers significant opportunities because markets that were formerly protected from foreign competition are increasingly open.
Q:
Since the number of trade groups in the African continent is impressive, progress toward the establishment of meaningful trade blocs has been fast.
Q:
The stated aim of the Asia-Pacific Economic Cooperation is to increase multilateral cooperation in view of the economic rise of the Pacific nations and the growing interdependence within the region.
Q:
The basic objective of the Association of Southeast Asian Nations is to foster freer trade among member countries and to achieve cooperation in their industrial policies.
Q:
A major stumbling block in the creation of the Free Trade Area of the Americas is that the United States wants its southern neighbors to agree to higher manufacturing tariffs, which they are not eager to embrace.
Q:
The Andean Community now operates as a customs union.
Q:
The Andean Pact was largely based on the European Union model and was highly successful at achieving its stated goals.
Q:
Since its establishment in January 1, 1999, the euro has steadily appreciated against the U.S. dollar, reaffirming the ability of the European Central Bank to manage monetary policy within the euro zone.
Q:
In an optimal currency area, 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.
Q:
A disadvantage of the euro is that the development of a pan-European, euro-denominated capital market will decrease the range of investment options open to both individuals and institutions.
Q:
By adopting the euro, the European Union has created the second most widely traded currency in the world after that of the U.S. dollar.
Q:
The European Parliament, which meets in Strasbourg, France, is primarily a legislative rather than consultative body.
Q:
The European Parliament is responsible for proposing European Union (EU) legislation, implementing it, and monitoring compliance with EU laws by member-states.
Q:
The European Council is composed of one representative from the government of each member-state but the membership varies depending on the topic being discussed.
Q:
The European Commission is the ultimate controlling authority within the European Union because draft legislation from the commission can become EU law only if the council agrees.
Q:
With the signing of the Treaty of Rome in 1957, the European Free Trade Association was established.
Q:
The European Union is by far more significant than the European Free Trade Association (EFTA), in terms of membership as well as economic and political influence in the world economy.
Q:
In theory, the World Trade Organization rules should ensure that a free trade agreement results in trade diversion.
Q:
Trade creation occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area.
Q:
Some economists have pointed out that the benefits of regional integration are determined by the extent of trade diversion, as opposed to trade creation.
Q:
In terms of regional economic integration, linking neighboring economies and making them increasingly dependent on each other create incentives for political cooperation between the neighboring states.
Q:
Economic theories suggest that free trade and investment is a positive-sum game, in which all participating countries stand to gain.
Q:
A political union addresses the issue of how to make a coordinating bureaucracy accountable to the citizens of member nations of an economic union.
Q:
In a customs union, a common currency is adopted.
Q:
A common market has no barriers to trade among member countries, includes a common external trade policy, and allows factors of production to move freely among members.
Q:
The emphasis of the European Free Trade Association has been on free trade in consumer goods.
Q:
In a free trade area, all barriers to the trade of goods and services among member countries are removed and a common external trade policy is adopted.
Q:
As with free trade in general, regional economic integration creates gain for consumers, but it can be challenging for some producers.
Q:
Briefly describe how the creation of a single market through regional economic integration offers significant opportunities. Provide an example.
Q:
Briefly describe the Association of Southeast Asian Nations.
Q:
Describe the Central American Common Market and the Central America Free Trade Agreement.
Q:
Describe the arguments for the North American Free Trade Agreement (NAFTA).
Q:
Describe the drawbacks of the euro.
Q:
Briefly describe the benefits of the euro.
Q:
What were the objectives of the Single European Act?
Q:
Briefly describe the European Council.
Q:
What are the two political factors that led to the creation of the European Union?
Q:
Define trade creation and trade diversion with respect to regional economic integration.
Q:
What are the two impediments to regional economic integration?
Q:
How is a common market different from an economic union?
Q:
Differentiate between a free trade area and a customs union. Provide an example of each form of economic integration.
Q:
Briefly describe the concept of regional economic integration.
Q:
Which of the following is a threat facing the emergence of single markets?
A.Getting engulfed in a trade war
B.Increased price competition throughout the European Union
C.Increase in price differentials across nations
D.Reduced environmental standards in order to lure investments
E.Overabundance of greenfield investments
Q:
Which of the following is true of the East African Community (EAC)?
A.Its program includes cooperation on immigration, road and telecommunication networks, investment, and capital markets.
B.Its aim is to eliminate import tariffs among the six original members.
C.It is the world's largest free trade area.
D.It seeks to apply national environmental standards, provided such standards have a scientific basis.
E.It seeks to protect intellectual property rights.
Q:
Which of the following is true with regard to the Asia-Pacific Economic Cooperation (APEC)?
A.The stated aim of APEC is to increase multilateral cooperation in view of the economic rise of the Pacific nations.
B.The goal of APEC is to reduce import tariffs among the six original members to zero.
C.APEC is the world's largest free trade area.
D.Collectively, the member-states account for about 85 percent of the world's GNP, 75 percent of world trade, and much of the growth in the world economy.
E.APEC currently has 25 member-states, including such economic powerhouses as Germany, India, and Brazil.
Q:
Which of the following is true of the Asia-Pacific Economic Cooperation (APEC)?
A.It does not include the United States, Japan, and China.
B.The meeting of APEC members in Seattle in 1993 led to greater economic integration.
C.It was founded in 1990 at the suggestion of Australia.
D.APEC members signed a free trade agreement with China that removes tariffs on 90 percent of traded goods.
E.APEC members have established a free trade zone.
Q:
Which of the following refers to an attempt to establish a free trade area between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam?
A.Asia-Pacific Economic Cooperation
B.South Asian Association for Regional Cooperation
C.Asian Clearing Union
D.Association of Southeast Asian Nations
E.Maastricht Treaty
Q:
Which of the following is a major obstacle to the establishment of the Free Trade Area of the Americas?
A.The United States wants its southern neighbors to agree to tougher enforcement of intellectual property rights, which they do not want to embrace.
B.Some constituent nations insist on a common currency, an initiative that has not found support among many nations.
C.Brazil and Argentina want the United States to open up critical industries such as telecom and airlines.
D.The major trading blocks in the region, NAFTA and Mercosur, have opposed its establishment.
E.There is no consensus on trade policies between Brazil and Argentina.
Q:
Which of the following is the goal of the Caribbean Single Market and Economy?
A.To remove all trade barriers between member nations in practice
B.To establish a political union
C.To adopt a common currency
D.To harmonize macroeconomic and monetary policy between member-states
E.To establish an economic union
Q:
Which of the following refers to an association of English-speaking Caribbean states that are attempting to establish a customs union?
A.CARICOM
B.Central American Free Trade Agreement
C.Central American Common Market
D.Free Trade Area of the Americas
E.Caribbean Single Market and Economy
Q:
Which of the following is the aim of the Central America Free Trade Agreement?
A.Lowering of trade barriers between the United States and the Central American Common Market countries
B.Elimination of trade barriers between the CARICOM and Central American Common Market countries
C.Reduction of trade barriers between Caribbean Single Market and Economy nations and Central American Common Market countries
D.Introduction of a common currency for Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua
E.Reductions in tariffs and quotas between Costa Rica, Dominican Republic, and Nicaragua
Q:
The agreement of the member-states of the Central American Common Market joined by the Dominican Republic to trade freely with the United States is known as the:
A.Central American Free Trade Agreement.
B.Central American Common Market.
C.Free Trade Area of the Americas.
D.CARICOM.
E.Caribbean Single Market and Economy.
Q:
Which of the following led to the collapse of the Central American Common Market in 1969?
A.Devaluation of the Brazilian currency by 40 percent
B.A coup in Nicaragua that led to the overthrow of the incumbent regime
C.War between Honduras and El Salvador after a riot at a soccer match between teams from the two countries
D.Withdrawal from the trade arrangement by Costa Rica
E.Collapse of monetary policy between Costa Rica and El Salvador
Q:
Which of the following refers to a trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, which began in the early 1960s but collapsed in 1969 due to war?
A.Central American Common Market
B.Free Trade Area of the Americas
C.Caribbean Single Market and Economy
D.Mercosur
E.CARICOM
Q:
Which of the following is a reason why Mercosur was temporarily suspended in 2001?
A.The dotcom bust in Paraguay
B.An economic crisis in Argentina
C.The exit of Uruguay from the group
D.The devaluation of the Mexican peso
E.The Venezuelan financial crisis
Q:
Which of the following is true of Alexander Yeats's criticism of the Andean Pact?
A.He pointed out that the slowest growing items in intra-Mercosur trade were cars, buses, agricultural equipment, and other capital-intensive goods.
B.He believed that the trade creation effects of Mercosur outweighed its trade diversion effects.
C.He felt that Mercosur countries were prepared to compete globally once the group's external trade barriers came down.
D.He pointed out that Mercosur countries were insulated from outside competition by tariffs that run as high as 70 percent of value.
E.He felt that capital was being drawn toward more efficient enterprises.
Q:
Which of the following refers to a pact that originated in 1988 to establish a free trade area now including Argentina, Brazil, Paraguay, and Uruguay?
A.ASEAN
B.NAFTA
C.Mercosur
D.CARICOM
E.CAFTA
Q:
The Andean Community now operates as a(n):
A.common market.
B.economic union.
C.customs union.
D.command economy.
E.political union.
Q:
Which of the following is true of the Andean Pact during the mid-1980s?
A.Tariff-free trade existed between member countries.
B.Harmonization of economic policies between member countries had been achieved.
C.Successful integration of member economies had been achieved.
D.The Pact had failed to achieve the objective of a common external tariff.
E.The dominant political ideology in many of the Andean countries tended toward democracy.
Q:
Which of the following is true of the Andean Pact of 1969?
A.Political and economic problems seem to have hindered cooperation among member countries of the Andean Pact.
B.By the mid-1980s, the Andean Pact achieved most of its stated objectives.
C.The dominant political ideology in many of the Andean countries tended toward the democratic end of the political spectrum.
D.The Galpagos Declaration effectively replaced the Andean Pact in 1997.
E.The Andean Pact sought to remove a common external tariff.