Question 1

Static effects are the overall growth in the market and the impact on a company caused by expanding production and by the company's ability to achieve greater economies of scale.

Accepted Answer

Static effects refer to the immediate impacts on trade patterns, resource allocation, and income distribution resulting from the removal of trade barriers, not to overall market growth or economies of scale.

Question 2

Which of the following statements about the euro is true?

Accepted Answer

The statement "It was designed to eliminate currency as a barrier to trade in the EU" is true. This was one of the main reasons for creating the euro, as it facilitates trade and economic integration among EU countries by eliminating currency exchange costs and risks.

A) is false as not all existing EU members adopted the euro when it was first initiated. 
B) is partially true, as adopting the euro is a requirement for joining the EU, but it is not the only precondition. 
C) is false, as only EU member countries can use the euro as their currency.

Question 3

Explain the static effects and dynamic effects of economic integration.What is the difference between trade creation and trade diversion resulting from economic integration?

Accepted Answer

The answer of Explain the static effects and dynamic effects...

Question 4

The shifting of resources from inefficient to efficient companies as trade barriers fall produces static effects.

Accepted Answer

As trade barriers fall, resources shift from less efficient companies to more efficient ones, resulting in static effects. This is because the economy is operating with the same amount of resources, but those resources are being allocated more efficiently. Static effects do not take into account changes in total output or economic growth over time.

Question 5

The ________ is the European Union's ultimate decision-making body and is composed of the different ministers of the member countries.

Accepted Answer

The Council of the European Union is the EU's ultimate decision-making body, composed of ministers from each member country. The European Commission is responsible for proposing and enforcing EU laws, while the European Parliament represents the citizens of the EU and has a role in the legislative process. The European Court of Justice is the supreme court of the European Union and ensures that EU law is applied uniformly in all member states.

Question 6

The shifting of trade to countries in a regional group at the expense of trade with countries not in the group is known as trade internalization.

Accepted Answer

The shifting of trade to countries in a regional group at the expense of trade with countries not in the group is known as trade diversion.

Question 7

The EU organization that ensures consistent interpretation and application of EU treaties is the ________.

Accepted Answer

The Court of Justice is the EU organization responsible for ensuring consistent interpretation and application of EU treaties. The European Commission is responsible for proposing and implementing EU laws, the Council of Ministers is responsible for representing member state governments and adopting EU laws, and the Council of Treaties and Laws does not exist as an EU organization.

Question 8

MNEs are attracted to regional trading groups because of their large market sizes and production locations, and because they ________.

Accepted Answer

MNEs (Multinational Enterprises) are attracted to regional trading groups not only for their large market sizes and production locations but also because they are good sources for raw materials. This allows MNEs to access necessary inputs for their production processes more efficiently.

Question 9

Trade creation allows consumers access to more goods at a lower price than would have been possible without integration.

Accepted Answer

This statement is true. When countries form a trade agreement, it reduces trade barriers such as tariffs and quotas, allowing for freer movement of goods and services. This can lead to increased competition and lower prices for consumers, as well as access to a wider variety of goods.

Question 10

When free mobility of factors of production is added to a common market, the result is a customs union.

Accepted Answer

When free mobility of factors of production is added to a common market, the result is an economic union, not a customs union. A customs union is a form of economic integration where countries eliminate tariffs and other barriers to trade between them but maintain their own external trade policies with non-member countries.

Question 11

Hudson Manufacturing is an MNE based in the United States with operations in Asia.The firm is considering expansion into the European Union.Which of the following questions is most relevant to the decision?

Accepted Answer

The most relevant question for Hudson Manufacturing's expansion into the European Union is identifying the best production location, as it directly impacts operational efficiency, costs, and market access.

Question 12

The EU organization that provides political leadership, drafts laws, and runs the daily programs of the EU is the ________.

Accepted Answer

The European Commission is the EU organization that provides political leadership, drafts laws, and runs the daily programs of the EU. The Council of Ministers is composed of nation-state representatives and functions as the main decision-making body of the EU. The European Parliament is the EU's only directly elected institution and primarily serves as a consultative body. The "European Central Bureaucracy" is not a recognized EU institution.

Question 13

Members of the Andean Community (CAN)have a common external tariff.CAN is most likely a ________.

Accepted Answer

A common external tariff is a defining characteristic of a customs union. The Andean Community (CAN) is a regional trade bloc that was established in 1969 and includes countries in South America. As a customs union, member countries of the CAN have agreed to impose a common external tariff on imports from non-member countries, while allowing for free trade among themselves. This helps to create a more unified market and prevent outside competition from threatening domestic industries within the bloc.

Question 14

Which of the following was primarily responsible for establishing the euro?

Accepted Answer

The Treaty of Maastricht, signed in 1992, established the European Union and its common currency, the euro. It laid out the criteria for countries wanting to join the eurozone and created the European Central Bank to manage monetary policy. Additionally, it introduced the concept of European citizenship and strengthened cooperation in foreign and defense policy.

Question 15

The ________ is the common currency of the European Union.

Accepted Answer

The Euro is the common currency of the European Union, currently used by 19 out of 27 member states. The franc was the currency of France before being replaced by the Euro in 2002. The pound is the currency of the United Kingdom, which is not part of the European Union anymore. The mark was the currency of Germany before the introduction of the Euro.

Question 16

Hudson Manufacturing is an MNE based in the United States with operations in Asia.The firm is considering expansion into the European Union.Executives at the firm are debating whether central Europe or Eastern Europe would be best for the firm.Which of the following best supports a decision to establish operations in Eastern Europe?

Accepted Answer

Eastern Europe generally has lower labor costs compared to central Europe, making it a better option for Hudson if they want to minimize costs. Option A is not relevant to the location decision, option B is a good practice for any foreign facility and does not necessarily support a decision for one region over another, and option D is also not relevant to the location decision.

Question 17

Which of the following groups of countries is most likely to form a regional trading group?

Accepted Answer

Canada, United States, and Mexico have already formed the North American Free Trade Agreement (NAFTA) and are geographically close, making it more likely for them to form a regional trading group. India, Argentina, France; Brazil, Ukraine, Japan; and Spain, South Africa, Mongolia do not share the same geographic proximity and do not have existing trade agreements.

Question 18

Which of the following members of the European Union has NOT adopted the euro?

Accepted Answer

Denmark has not adopted the euro and uses the Danish krone as its currency. Estonia, Germany, and Greece have all adopted the euro as their currency.

Question 19

The three major responsibilities of the ________ are legislative power, control over the budget, and supervision of executive decisions.

Accepted Answer

The European Parliament is responsible for legislative power, control over the budget, and supervision of executive decisions. The European Commission is responsible for proposing and enforcing EU laws, while the European Council is responsible for setting the EU's political direction and priorities. The European Court of Justice is responsible for interpreting EU law and ensuring its uniform application across all EU member states.

Question 20

Describe the different types of regional economic integration and give an example of each type.

Accepted Answer

The answer of Describe the different types of regional economic...

Quiz 8: Cross-National Cooperation and Agreements