Deck 8: Regional Economic Integration

Question 1

Trade agreements are lowering trade barriers and opening new markets for goods and services.

Answer 1

True

Question 2

In a free-trade area, each country is able to maintain whatever policy it sees fit against nonmember countries.

Answer 2

True

Question 3

Countries belonging to the free-trade area must concede a certain amount of their national autonomy (or sovereignty) to the supranational union of which they are a part.

Answer 3

False

Question 4

The greatest benefit of regional integration is trade diversion.

Question 5

A political union requires nations to accept a common stance on all economic and political policies within their territories.

Question 6

The benefits to individual nations in a common market are typically distributed fairly evenly.

Question 7

The goals of nations undergoing economic integration are to protect their national identity and national security at all costs.

Question 8

In the absence of tariffs, multinationals can save money by supplying entire regions from just a few regional factories, rather than have a factory in each nation.

Question 9

One result of trade creation is that buyers pay higher prices for imported goods and services after trade barriers are removed.

Question 10

The process whereby countries in a geographic region cooperate to reduce or eliminate barriers to the international flow of products, people, or capital is known as regional economic integration (regionalism).

Question 11

One result of trade creation is that consumers and industrial buyers in member nations have a wider selection of goods and services than before.

Question 12

A common market area is the greatest extent of national integration.

Question 13

Integration involving political cooperation typically intensifies the potential for military conflict between member nations.

Question 14

A common market requires that member nations harmonize their tax, monetary, and fiscal policies, and that they create a common currency.

Question 15

A group of nations in a geographic region undergoing economic integration is called a regional trading bloc.

Question 16

The increase in the level of trade between nations that results from regional economic integration is called trade creation.

Question 17

The main difference between a free-trade area and a customs union is that the members of a free-trade area agree to treat trade with all nonmember nations in a similar manner.

Question 18

A common market integrates elements of free-trade areas and customs unions while adding the free movement of important factors of production people and cross-border investment.

Question 19

Canada and the United States are examples of early formations of political unions.

Question 20

The diversion of trade away from nations not belonging to a trading bloc and toward member nations is called trade diversion.

Question 21

A benefit of regional economic integration is that it always expands employment opportunities in all nations.

Question 22

The least amount of sovereignty that must be surrendered to the trading bloc occurs in a political union.

Question 23

The European Parliament fulfills its role of adopting European Union law by debating and amending legislation.

Question 24

The European Free Trade Association (EFTA) has been completely abolished in light of successful integration of the European Union.

Question 25

Countries of the European Union are unanimous in their quest to further enlarge the union.

Question 26

When trade diversion occurs, buyers will likely pay less for products.

Question 27

In regional economic integration, industries requiring mostly unskilled labor will tend to shift production to low-wage nations within a trading bloc.

Question 28

One country that is a logical, but highly unlikely, candidate for future membership in the European Union is Luxembourg.

Question 29

Like the European Union (EU) commissioners, EU justices are required to act in the interest of their native countries.

Question 30

Economic integration can unintentionally reward a less efficient producer within a trading bloc.

Question 31

Because commissioners are appointed by their national governments to the European Commission, they are expected to behave in their own countries' best interest.

Question 32

In addition to the free internal movement of goods, services, labor, and capital, the Treaty of Rome also aimed at establishing common policies among member nations for transportation and agriculture.

Question 33

The European Union (EU) and European Free Trade Association (EFTA) created the European Economic Area to cooperate on matters such as the free movement of goods, persons, services, and capital.

Question 34

The Court of Justice is the court of appeals of the European Union.

Question 35

The Maastricht Treaty called for a common currency, monetary and fiscal targets for members, and eventual political union of the member nations.

Question 36

The members of the European Coal and Steel Community signed the Treaty of Rome in 1951 and created the Andean Community.

Question 37

Economic integration can result in increased trade with a less efficient producer within the trading bloc and reduced trade with a more efficient nonmember producer.

Question 38

The goal of the Single European Act was to reduce the ability of European companies to compete against companies from Japan and North America.

Question 39

The Council of the European Union (EU) is the legislative body of the EU.

Question 40

Because the formation of trading blocs significantly reduces or eliminates barriers to trade among members, the producer of a particular good or service is likely to be the least productive producer.

Question 41

Nations in the Americas are working to create a free-trade area that runs from the northern tip of Alaska to the southern tip of South America.

Question 42

North America was about three decades behind Europe in taking major steps toward economic integration.

Question 43

Which of the following is NOT a goal of regional economic integration?

A) Protection of intellectual property rights
B) Protection of the environment
C) Creation of a political union
D) Lowering cross-border investment

Question 44

The only Western Hemisphere nation that would NOT be part of the Free Trade Area of the Americas (FTAA) is Cuba.

Question 45

The process whereby countries in a geographic region cooperate with one another to reduce or eliminate barriers to the international flow of products, people, or capital is called ________.

A) regional economic integration
B) regional domestication
C) regionalism
D) both A and C

Question 46

Economic integration whereby countries remove all barriers to trade among themselves, but each country determines its own barriers against nonmembers is called a(n) ________.

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

Question 47

The primary purpose of the Gulf Cooperation Council (GCC) at its formation was to create a political union between Iraq and Iran.

Question 48

The Caribbean Community and Common Market (CARICOM) was formed in 1961 as a common market between Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.

Question 49

Although Canada traded very little with Mexico before the North American Free Trade Agreement (NAFTA) went into effect, Mexico is now Canada's largest trading partner.

Question 50

The Southern Common Market is also referred to as MERCOSUR.

Question 51

The North American Free Trade Agreement membership includes Canada, Mexico, and the United States.

Question 52

For members of the Andean Community, a free-trade area is in place but the customs union and the common market are behind schedule.

Question 53

A group of nations in a geographic region undergoing economic integration is called a ________.

A) regional economic integration
B) regional domestication
C) regional trading bloc
D) foreign direct investment region

Question 54

Today, the Southern Common Market (MERCOSUR) acts as a political union.

Question 55

Indonesia, Malaysia, the Philippines, Singapore, and Thailand formed the Association of Southeast Asian Nations (ASEAN) in 1967.

Question 56

The stated aim of the organization for Asia Pacific Economic Cooperation (APEC) is to NOT build another trading bloc.

Question 57

Regionalism ________.

A) is the process whereby countries in a geographic region cooperate with one another to reduce or eliminate barriers to the international flow of product, people or capital
B) should increase cross-border trade
C) should raise living standards in participating nations
D) all of the above

Question 58

Nations undergoing economic integration desire to ________.

A) increase cross-border investment
B) raise living standards for their people
C) increase cross-border trade
D) all of the above

Question 59

Which of the following is the lowest extent of national integration?

A) Free-trade area
B) Political union
C) Common market
D) Customs union

Question 60

The African Union (AU) aims to promote peace, security, and stability across Africa, and accelerate economic and political integration while addressing problems of globalization.

Question 61

All of the following are potential drawbacks of regional integration EXCEPT ________.

A) loss of national sovereignty
B) shifts in employment
C) trade diversion
D) greater consensus

Question 62

Higher levels of trade between nations results in all of the following EXCEPT ________.

A) less specialization
B) increased efficiency
C) greater consumption
D) higher standards of living

Question 63

Which of the following is best classified as an economic union?

A) Southern Common Market (MERCOSUR)
B) European Union (EU)
C) North American Free Trade Agreement (NAFTA)
D) Andean Community

Question 64

A(n) ________ requires member nations to harmonize their tax, monetary, and fiscal policies and create a common currency.

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

Question 65

In 1951, Belgium, France, West Germany, ________, Luxembourg, and the Netherlands created what was called the European Coal and Steel Community.

A) the United Kingdom
B) Austria
C) Turkey
D) Italy

Question 66

A group of nations currently taking steps toward political union is ________.

A) European Union (EU)
B) Southern Common Market (MERCOSUR)
C) Andean Community
D) North American Free Trade Agreement (NAFTA)

Question 67

Which of the following is NOT a result of trade creation?

A) Lower costs tend to lead to higher demand for goods because people have more money left over after a purchase to buy other products.
B) Buyers can acquire goods and services at lower cost after trade barriers are lowered.
C) Consumers and industrial buyers in member nations are faced with a wider selection of goods and services not available before.
D) Imported goods are available at higher prices.

Question 68

Which of the following requires nations to give up the least amount of sovereignty?

A) Economic union
B) Common market
C) Free-trade area
D) Political union

Question 69

The increase in the level of trade among nations that results from regional economic integration is called ________.

A) trade diversion
B) trade restriction
C) trade creation
D) trade embargo

Question 70

Economic integration whereby countries remove barriers to trade and the movement of labor and capital, erect a common trade policy against nonmembers, and coordinate their economic policies is called a(n) ________.

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

Question 71

The most sophisticated and advanced example of regional integration today is occurring in ________.

A) Asia
B) Europe
C) North America
D) Africa

Question 72

Economic integration whereby countries remove all barriers to trade and the movement of labor and capital between themselves but erect a common trade policy against nonmembers is called a(n) ________.

A) economic union
B) customs union
C) common market
D) political union

Question 73

Canada and the United States are early examples of ________.

A) customs unions
B) free-trade areas
C) economic unions
D) political unions

Question 74

A key objective of early integration efforts in Europe in the 1950s was ________.

A) trade creation
B) trade diversion
C) peace
D) greater consensus

Question 75

Integration whereby countries coordinate aspects of their economic and political systems is called a(n) ________.

A) free-trade area
B) common market
C) political union
D) economic union

Question 76

The main difference between a free-trade area and a customs union is that the members of a customs union ________.

A) agree to treat trade with all nonmember nations in a similar manner
B) agree to the free movement of all factors of production
C) harmonize their tax, monetary, and fiscal policies and create a common currency
D) accept a common stance on economic and political policies regarding nonmember nations

Question 77

A(n) ________ is the greatest extent of national integration.

A) economic union
B) common market
C) political union
D) customs union

Question 78

All of the following are true of trade diversion EXCEPT that it ________.

A) is the opposite of trade creation
B) can unintentionally reward a less-efficient producer within the trading bloc
C) can increase prices of products
D) guarantees consumers a wider selection of goods

Question 79

Economic integration whereby countries remove all barriers to trade among themselves, but erect a common trade policy against nonmembers is called a(n) ________.

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

Question 80

Studies of the Southern Common Market (MERCOSUR) found that the net effect of the agreement was ________.

A) trade diversion
B) trade creation
C) slower trade
D) regional inflation