Question 1

There are more EU member countries than there are countries using the euro.

Accepted Answer

Currently, there are 27 member countries in the European Union, while only 19 of them use the euro as their official currency.

Question 2

The national deficit is the amount of borrowing that a country does from either the private sector or other countries.

Accepted Answer

The national deficit refers to the difference between a country's expenditures and revenues in a given year, which leads to borrowing from either the private sector or other countries to finance government expenses.

Question 3

Tariffs refer to taxes, which are placed on imports or exports.

Accepted Answer

Tariffs are taxes placed on imports or exports.

Question 4

The goal of NAFTA has been to encourage trade between the South American countries.

Accepted Answer

NAFTA (North American Free Trade Agreement) is an agreement between Canada, the United States, and Mexico. It does not include South American countries.

Question 5

The primary difference of the customs union from the free trade area is that members agree to treat trade with nonmember countries in a similar manner.

Accepted Answer

This is a defining feature of a customs union. In a free trade area, members do not necessarily have a common external tariff or trade policy towards nonmember countries.

Question 6

A country is not allowed to borrow money for investing in domestic projects such as investing in the public sector or building infrastructure.

Accepted Answer

Countries are allowed to borrow money for investing in domestic projects such as investing in the public sector or building infrastructure, though it is important to note that excessive borrowing can lead to debt crises and other economic problems.

Question 7

Government procurement and bidding, industrial standards, and subsidies are examples of tariff trade barriers.

Accepted Answer

These are examples of non-tariff barriers. Tariff barriers specifically refer to taxes or duties imposed on imported goods.

Question 8

The Andean Community is a free trade agreement signed in 1969 between Bolivia, Chile, Colombia, Ecuador, and Peru.

Accepted Answer

The statement is true. The Andean Community (also known as the Andean Pact) was signed in 1969 and includes Bolivia, Chile, Colombia, Ecuador, and Peru.

Question 9

GATT's initial focus was on non-tariff barriers of trade.

Accepted Answer

GATT's initial focus was on reducing tariffs, not non-tariff barriers.

Question 10

Dumping occurs when a company exports to a foreign market at a price that is either lower than the domestic prices in that country or less than the cost of production.

Accepted Answer

This is the definition of dumping.

Question 11

MERCOSUR is committed to the consolidation of democracy and the maintenance of peace throughout the Asian continent.

Accepted Answer

This statement is false. MERCOSUR is a South American trade bloc and is not directly involved with peace and democracy efforts in Asia.

Question 12

One of GATT's key provisions stated that if the most-favored-nation clause status was granted by a country to another country, then it was automatically extended to all other member countries.

Accepted Answer

This is correct, as one of the key provisions of GATT was that if a member country granted the most-favored-nation status to another country, then it was automatically extended to all other member countries. This meant that no member country could discriminate against any other member country when it came to trade relations, and helped promote freer and fairer trade among nations.

Question 13

A country may resort to reducing the tax rates on its citizens in order to stimulate its economy.

Accepted Answer

By reducing tax rates, citizens will have more disposable income to spend, leading to increased spending and economic activity. This can stimulate the economy and encourage investment.

Question 14

Global businesses have teams of in-house professionals monitoring the WTO as well as the regional trade alliances.

Accepted Answer

Global businesses often have in-house professionals dedicated to monitoring the World Trade Organization (WTO) and regional trade alliances to stay informed about trade agreements and regulations that may affect their operations.

Question 15

A country borrows money during a recession in order to keep its basic public services operating until the economy improves.

Accepted Answer

During a recession, tax revenues decrease as people and businesses earn less money. As a result, a government may need to borrow money to maintain basic public services such as education, healthcare, and infrastructure. This can help to prevent a further decline in the economy, and allow for a quicker recovery when conditions improve.

Question 16

Intellectual property rights (IPR) law does not deal with the financial aspect of a creation of an individual.

Accepted Answer

IPR law deals with protecting the exclusive rights of the creator of an original work, which can have financial implications such as licensing and royalties.

Question 17

WTO functions as a trade facilitator for the member countries but it has no power to hear disputes or suggest a solution.

Accepted Answer

WTO does have power to hear disputes between member countries and suggest solutions through its Dispute Settlement Body.

Question 18

The European Union (EU) consists of the same countries as the continent of Europe.

Accepted Answer

The European Union (EU) consists of some but not all countries in the continent of Europe. Some European countries like Switzerland or Norway are not part of the EU. Additionally, a part of Europe is not within the EU, such as countries like Russia or Belarus.

Question 19

Current account deficit refers to imports being greater than exports.

Accepted Answer

Current account deficit occurs when a country's imports of goods, services, and investments are greater than its exports of those same goods, services, and investments.

Question 20

The General Agreement on Trade in Services (GATS) requires member nations to treat foreign service companies as they would domestic ones.

Accepted Answer

The GATS requires member nations to provide foreign service companies with the same treatment as domestic ones, known as the principle of national treatment.

Quiz 5: Global and Regional Economic Cooperation and Integration