Question 1

Which trade agreement aims to remove all barriers to the free flow of goods between Canada, the United States and Mexico?
A) TRIPS
B) Mercosur
C) NAFTA
D) EU
E) ASEAN

Accepted Answer

NAFTA (North American Free Trade Agreement) was established to eliminate barriers to trade and investment between the U.S., Canada, and Mexico.

Question 2

The six member countries that have embraced a common market are disappointed with the outcome of their economic integration. They want something that entails a closer economic integration and cooperation than a common market and decide to pursue a common currency. They are forming a(n)
A) command economy.
B) customs union.
C) efficient market.
D) free trade area.
E) economic union.

Accepted Answer

An economic union involves closer economic integration and cooperation than a common market, including the adoption of a common currency.

Question 3

What is a defining characteristic of 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.

Accepted Answer

In a free trade area, member countries eliminate tariffs and trade barriers among themselves but retain the freedom to set their own trade policies with non-member countries.

Question 4

The European Union is considered a(n) ________ even though not all members have adopted a common currency.
A) planned economy
B) free trade area
C) economic union
D) customs union
E) common market

Accepted Answer

The answer of The European Union is considered a(n) ________...

Question 5

The failure of the Doha Round of talks helped foster renewed emphasis on bilateral trade agreements.

Accepted Answer

The failure of the Doha Round, which aimed for multilateral trade agreements, led countries to pursue bilateral agreements as an alternative to achieve trade liberalization goals.

Question 6

A firm that operates outside of a trading bloc will likely face the improved position of competitors within the trading bloc.

Accepted Answer

Competitors within a trading bloc benefit from reduced tariffs and trade barriers, giving them a competitive advantage over firms outside the bloc.

Question 7

The free trade pact known as Mercosur has been successful at creating a full customs union between Brazil and Argentina.

Accepted Answer

Mercosur has not achieved a full customs union as there are still exceptions and barriers to trade between member countries, including Brazil and Argentina.

Question 8

To spur trade, four South American countries decide there will be no barriers to trade between the countries, agree on a common external trade policy, and allow factors of production to move freely between them. In short, the four countries formed a(n)
A) command economy.
B) customs union.
C) common market.
D) efficient market.
E) free trade area.

Accepted Answer

A common market is a type of trade bloc that allows for the free movement of goods, services, capital, and labor between member countries, along with a common external trade policy.

Question 9

Canada and the United States agree to remove all barriers to the trade of goods between them. However, the countries agree that each would be allowed to determine its own trade policies with regard to nonmembers. The economic integration between these countries is called a(n)
A) free trade area.
B) customs union.
C) common market.
D) economic union.
E) political union.

Accepted Answer

A free trade area is an agreement between countries to remove trade barriers on goods among themselves while allowing each country to set its own trade policies with nonmember countries.

Question 10

The European Free Trade Association initially consisted of member nations that
A) were not interested in lifting trade barriers.
B) did not produce industrial goods.
C) wanted to form an agreement with the United States.
D) decided not to be part of the European Community.
E) imposed a common tariff, of 5 to 20 percent, on imported products.

Accepted Answer

The European Free Trade Association (EFTA) was established by countries that chose not to join the European Economic Community (EEC), which later became the European Union (EU).

Question 11

Today, developments in the EU and NAFTA carry the biggest implications for business practices.

Accepted Answer

The question states that developments in the EU and NAFTA carry the biggest implications for business practices. This is true because the EU and NAFTA are two of the largest and most important trading blocs in the world. Changes in the regulations or policies of these blocs can have a significant impact on businesses that operate within them.

Question 12

Within a(n) ________, there is a level of economic integration that 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

Accepted Answer

An economic union involves the highest level of economic integration, including a common currency, harmonized tax rates, and shared monetary and fiscal policies among member countries.

Question 13

While the countries of Canada and Mexico are committed to removing all barriers to the free flow of goods and services between each other, they are independent in their trade policy dealings with other countries. This represents a(n)
A) free trade area.
B) customs union.
C) common market.
D) economic union.
E) political union.

Accepted Answer

A free trade area is an agreement between countries to remove trade barriers between themselves while maintaining independent trade policies with non-member countries.

Question 14

Political turmoil in Africa has prevented the success of regional trade blocs.

Accepted Answer

Political instability in some African countries has hindered the effectiveness and growth of regional trade blocs by disrupting trade routes, creating uncertainty, and reducing investor confidence.

Question 15

Where has the movement toward regional economic integration been most ambitious?
A) Africa
B) South America
C) North America
D) Europe
E) Asia

Accepted Answer

Europe has been the most ambitious in regional economic integration, exemplified by the European Union (EU), which has established a single market, a common currency (the Euro for many of its members), and various political and economic agreements among its member states.

Question 16

What is 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

Accepted Answer

Free trade agreements are the most popular form of regional economic integration, as they involve the reduction or elimination of trade barriers between member countries, facilitating easier and increased trade.

Question 17

The six countries on the northern side of the Pacific Rim agreed to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other. The agreement among these countries is referred to as
A) regional economic integration.
B) cross-cultural integration.
C) a zoning agreement.
D) administrative trade policies.
E) a balance-of-trade equilibrium.

Accepted Answer

Regional economic integration 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.

Question 18

In a(n) ________, a group of countries are committed to removing all barriers to the free flow of goods and services between each other but pursue independent external trade policies.
A) free trade area
B) command economy
C) efficient market
D) foreign exchange market
E) location economy

Accepted Answer

A free trade area is where countries remove trade barriers between each other but maintain their own external trade policies.

Question 19

Three Latin American countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common external trade policy and charge the same tariffs. Which level of economic integration best describes this arrangement?
A) political union
B) customs union
C) common market
D) economic union
E) monetary union

Accepted Answer

A customs union involves the removal of tariffs and trade barriers between member countries and the adoption of a common external trade policy, which matches the description given.

Question 20

Under a common market agreement, you would find
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) a lack of administrative machinery to oversee trade relations with nonmembers.
E) mandatory use of a common currency among member nations.

Accepted Answer

A common market agreement allows for the free movement of factors of production, such as labor and capital, between member nations, facilitating economic integration and cooperation.

Quiz 9: Regional Economic Integration

Which trade agreement aims to remove all barriers to the free flow of goods between Canada, the United States and Mexico?

The six member countries that have embraced a common market are disappointed with the outcome of their economic integration. They want something that entails a closer economic integration and cooperation than a common market and decide to pursue a common currency. They are forming a(n)

What is a defining characteristic of a free trade area?

The European Union is considered a(n) ________ even though not all members have adopted a common currency.

The failure of the Doha Round of talks helped foster renewed emphasis on bilateral trade agreements.

A firm that operates outside of a trading bloc will likely face the improved position of competitors within the trading bloc.

The free trade pact known as Mercosur has been successful at creating a full customs union between Brazil and Argentina.

To spur trade, four South American countries decide there will be no barriers to trade between the countries, agree on a common external trade policy, and allow factors of production to move freely between them. In short, the four countries formed a(n)

Canada and the United States agree to remove all barriers to the trade of goods between them. However, the countries agree that each would be allowed to determine its own trade policies with regard to nonmembers. The economic integration between these countries is called a(n)

The European Free Trade Association initially consisted of member nations that

Today, developments in the EU and NAFTA carry the biggest implications for business practices.

Within a(n) ________, there is a level of economic integration that involves the use of a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy.

While the countries of Canada and Mexico are committed to removing all barriers to the free flow of goods and services between each other, they are independent in their trade policy dealings with other countries. This represents a(n)

Political turmoil in Africa has prevented the success of regional trade blocs.

Where has the movement toward regional economic integration been most ambitious?

What is the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements?

The six countries on the northern side of the Pacific Rim agreed to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other. The agreement among these countries is referred to as

In a(n) ________, a group of countries are committed to removing all barriers to the free flow of goods and services between each other but pursue independent external trade policies.

Three Latin American countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common external trade policy and charge the same tariffs. Which level of economic integration best describes this arrangement?

Under a common market agreement, you would find