Deck 3: The Global Trade Environment

Question 1

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.

Answer 1

True

Question 2

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.

Answer 2

False

Question 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.

Answer 3

True

Question 4

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

Question 5

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

Question 6

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

Question 7

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.

Question 8

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.

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

________ 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

Question 22

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

Question 23

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

Question 24

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.

Question 25

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.

Question 26

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

Question 27

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

Question 28

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.

Question 29

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

Question 30

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.

Question 31

Trade ministers representing the WTO member nations meet ________ to work on improving world trade.

A) weekly
B) monthly
C) annually
D) biannually
E) fortnightly

Question 32

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

Question 33

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

Question 34

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

Question 35

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.

Question 36

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.

Question 37

A true economic union requires:

A) political unity.
B) social services.
C) welfare.
D) regional development.
E) taxation.

Question 38

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.

Question 39

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

Question 40

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

Question 41

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.

Question 42

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

Question 43

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

Question 44

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.

Question 45

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.

Question 46

The most important preferential trading arrangements in Latin America do not include:

A) SICA.
B) the Andean Community.
C) CARICOM.
D) Mercosur.
E) BRIC.

Question 47

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.

Question 48

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

Question 49

About 70% of Ecuador's flower harvest is exported to:

A) Bolivia.
B) the United States.
C) Colombia.
D) Peru.
E) Venezuela.

Question 50

The five original members of the Central American Integration System did not include:

A) El Salvador.
B) Honduras.
C) Guatemala.
D) Nicaragua.
E) Venezuela.

Question 51

Which one of the ASEAN members has the World's second-largest container port?

A) Singapore
B) Thailand
C) India
D) Philippines
E) Brunei

Question 52

Considering the progress,attempts to achieve integration in Central America has been described as:

A) uncoordinated.
B) coordinated.
C) efficient.
D) costly.
E) productive.

Question 53

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.

Question 54

The country that withdrew from the original members of the Andean Community is:

A) Bolivia.
B) Chile.
C) Ecuador.
D) Peru.
E) Venezuela.

Question 55

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.

Question 56

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

Question 57

The "Common Market of the South" in Latin America is used to describe:

A) SICA.
B) Mercosur.
C) Andean Community.
D) CARICOM.
E) FTAA.

Question 58

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.

Question 59

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.

Question 60

The Secretariat for Central American Integration is headquartered in:

A) El Salvador.
B) Honduras.
C) Guatemala City.
D) Nicaragua.
E) Costa Rica.

Question 61

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.

Question 62

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

Question 63

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.

Question 64

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

Question 65

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.

Question 66

The new country joining the EU at the beginning of 2014 is:

A) Slovakia.
B) Estonia.
C) Latvia.
D) Slovenia.
E) Cyprus.

Question 67

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.

Question 68

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.

Question 69

The Gulf Cooperation Council (GCC)includes all of the following countries except:

A) Kuwait.
B) Saudi Arabia.
C) Iraq.
D) Bahrain.
E) Oman.

Question 70

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.

Question 71

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.

Question 72

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.

Question 73

The non-EU member which uses the euro as its currency is:

A) Estonia.
B) Kosovo.
C) Montenegro.
D) Vatican City.
E) San Marino.

Question 74

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."

Question 75

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.

Question 76

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.

Question 77

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.

Question 78

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.

Question 79

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).

Question 80

A key word(s)in conducting business in the Middle East is:

A) Arab Spring.
B) Connection.
C) Discrimination.
D) Male dominance.
E) haggling.