Deck 8: International Trade and Economic Integration

Question 1

_______________ is an important reason for economic integration.

A)Geographic proximity
B)Democracy
C)Totalitarianism
D)Common law practice

Answer 1

Geographic proximity

Question 2

Neighboring countries tend to collaborate for all of the following reasons EXCEPT:

A)the distance that goods need to travel between such countries is short
B)neighboring countries tend to be in similar economic situations and therefore are able to better control currency exchange rates
C)consumers' tastes are likely to be similar, and distribution channels can be easily established in adjacent countries
D)neighboring countries may have a common history and interests, and may be more willing to coordinate their policies

Answer 2

neighboring countries tend to be in similar economic situations and therefore are able to better control currency exchange rates

Question 3

Geographic proximity is an important reason for economic integration because consumer tastes are likely to be:

A)different.
B)opposite.
C)similar.
D)strange.

Answer 3

similar.

Question 4

Which of the following types of regional economic integration focuses only on eliminating internal tariffs?

A)customs union
B)common market
C)complete economic integration
D)free trade area

Question 5

In which of the following types of regional economic integration are internal tariffs eliminated with member countries levying a common external tariff on goods being

A)customs union
B)free trade area
C)common market
D)complete economic integration

Question 6

A _______________ focuses on eliminating internal tariffs with member countries levying a common external tariff on goods being imported from nonmembers. Additionally, this type of regional economic integration allows free mobility of production factors such as labor and capital.

A)free trade area
B)common market
C)customs union
D)complete economic integration

Question 7

In _______________, countries focus on eliminating internal tariffs among member countries, have a common external trading policy among nonmembers, allow free mobility of productions factors within member countries, and adopt common economic policies.

A)free trade area
B)customs union
C)complete economic integration
D)common market

Question 8

_______________ occurs when production shifts to more efficient producers for reasons of comparative advantage, allowing consumers access to more goods at a lower price than would have been possible without integration.

A)Trade diversion
B)Divestment
C)Trade creation
D)Retrenchment

Question 9

Which of the following was developed with the rationale that the U.S.-Canadian trade was the largest bilateral trade in the world and that the United States is Mexico's and Canada's largest trading partner?

A)CEFTA (the Central European Free Trade Agreement)
B)NAFTA (the North American Free Trade Agreement)
C)ASEAN (Association of South East Asian Nations)
D)EU (the European Union)

Question 10

_______________ occurs when trade shifts to countries in the group at the expense of trade with countries not in the group, even though the nonmember country might be more efficient in the absence of trade barriers.

A)Trade creation
B)Divestment
C)Retrenchment
D)Trade diversion

Question 11

NAFTA calls for all of the following EXCEPT:

A)the harmonization of trade rules
B)the liberalization of restrictions on services
C)the implementation of a common currency
D)the liberalization of restrictions on foreign investment

Question 12

NAFTA is a good example of:

A)trade erosion.
B)divestment.
C)retrenchment.
D)trade diversion.

Question 13

The _______________ is a political organization comprised of 185 countries, and it is headquartered in New York City. This organization deals with a variety of political issues, such as security and world peace, but it also deals in humanitarian and economic issues.

A)World Trade Organization
B)World Bank
C)European Union
D)United Nations

Question 14

Where is the headquarters of the EU?

A)Belgium
B)Netherlands
C)Luxembourg
D)Greece

Question 15

Where is the headquarters of the SAARC?

A)Manila
B)Kathmandu
C)New Delhi
D)Jakarta

Question 16

Apart from India, Pakistan and Bangladesh who are the other member countries of SAARC?

A)Nepal, Bhutan, Thailand and Singapore
B)Nepal, Bhutan, Malaysia and Maldives
C)Nepal, Bhutan, Maldives, Sri Lanka and Afghanistan
D)None of the above

Question 17

Which of the following is not the main purpose for formation of SAARC

A)To Combat Terrorism
B)To Promote the Welfare of the people of South Asia
C)To form mutual Defence against foreign aggression
D)None of the above

Question 18

SAPTA is a trade agreement by _________________

A)ASEAN Nations
B)APEC Nations
C)SAARC Nations
D)EU Nations