Deck 3: Regional Economic Integration

Question 1

Geographically, only about 25 percent of Turkey's land mass is in Europe.

Answer 1

False

Question 2

One could argue that regional and global integration are not complements, but substitutes to economic development of a particular region.

Answer 2

False

Question 3

Both free-trade areas and customs unions include abolition of restrictions on factor movements.

Answer 3

False

Question 4

Three countries, X, Y, and Z are part of a member area where they have eliminated all barriers to trade such as tariffs, quotas, and non-tariff barriers like border restrictions, while at the same time keeping their own external tariffs against nonmembers. Such an area could be described as a(n)_____ area.

A) regional
B) spatial
C) open trade
D) embargo
E) free trade

Question 5

Remote regions with small local markets which Paul Collier calls the "bottom billion," are located in Central Asia; East, Central and West Africa; and the Pacific Islands.

Question 6

Although market access is essential for economic growth, proximity to major world markets is the biggest liability for just-in-time production, exports of perishable goods and tradable services.

Question 7

According to the text, which of the following is NOT a stage of regional integration?

A) A customs union
B) An economic union
C) A free trade area
D) A common market
E) A embargo union

Question 8

CAFTA is the most highly evolved example of regional integration in the world.

Question 9

The World Bank's World Development Report (WDR), titled "Reshaping Economic Geography," analyzes trade and regional economic integration through the lens of economic geography (i.e., market size, location, and openness to trade). The WDR concludes that positive changes within these three categories are essential for successful regional integration.

Question 10

According to the Cultural Perspective box in Chapter 03, when French President, Nicolas Sarkozy, assumed his six-month European Union presidency in July 2008, the first initiative he launched was the Union for the _____.

A) Northeast
B) Southwest
C) North Americans
D) Mediterranean
E) Australians

Question 11

ASEAN, headquartered in New Delhi, India, was established in August 1967 by five founding members: India, Malaysia, the Philippines, Singapore, and Thailand.

Question 12

According to the text, which of the following is the third stage of regional integration?

A) A customs union
B) An economic union
C) A free trade area
D) A common market
E) A political union

Question 13

In 2003, ASEAN leaders agreed to establish an ASEAN Community based on three pillars: ASEAN Security Community; ASEAN Economic Community; and ASEAN Socio-Cultural Community.

Question 14

With uncertainty surrounding the outcome of the Doha Round of trade negotiations, countries (large and small)are clamoring for bilateral or regional trade agreements to meet their specific agendas causing economists to be concerned about the prospects of creating a truly open global economic system that benefits all countries.

Question 15

NAFTA is a comprehensive free-trade agreement among Canada, United States, and Mexico that addresses issues ranging from protection of workers' rights and the environment to phased reduction of tariff and non-tariff trade barriers, which were finally eliminated in 2009.

Question 16

In 1969, frustrated by the lack of progress in LAFTA, Bolivia, Chile, Colombia, Ecuador, and Peru joined in creating the Andean Group, which aimed to create economic integration through reduced taxes, a common external tariff, and investment in the poorer industrial areas of their respective countries.

Question 17

Through various treaties such as the Maastricht Treaty, the Copenhagen Treaty, the Treaty of Nice, and the Lisbon Treaty, the EU is deepening and strengthening its institutional (economic, political, social, and defense)linkages; this will hopefully, enable the EU to act as one country that will effectively compete with the U.S.

Question 18

A growing ASEAN concern is the economic ascendancy of Turkey, which as a major low-cost manufacturing center, has been one of the world's most attractive destinations for foreign direct investment.

Question 19

The appropriate approach for countries interested in regional integration could include the following three fundamentals: start small, think global, and compensate the least fortunate.

Question 20

_____ refers to the process of allowing efficient geographic distribution of business activities within and among countries.

A) Regional integration
B) Spatial transformations
C) Free trade
D) Economic integration
E) Economic geography

Question 21

Of the following statements regarding the euro, which is NOT true?

A) The U.K., Denmark, and Sweden use the euro as their currency.
B) It was introduced on January 1, 1999.
C) Seventeen of the 27 EU countries are permitted to use it as their currency.
D) The euro was considered the crowning success of the EU's plans to integrate European economies.
E) The European Central Bank is the apex central bank for the Eurozone countries.

Question 22

How many of the 27 EU member countries are permitted to use the euro as their currency?

A) 5
B) 10
C) 17
D) 20
E) 27

Question 23

The union created when member countries of an economic and monetary union work closely with one another to arrive at common defense and foreign policies and behave as a single country is known as a(n)_____.

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

Question 24

A group of free trade member countries that have adopted a common external tariff with nonmember countries is called a(n)_____.

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

Question 25

According to the text, which of the following is NOT a regional bloc close to world markets?

A) Guatemala
B) Chile
C) Russia
D) Singapore
E) None of the above is a regional bloc

Question 26

All of the following statements about regional integration are true EXCEPT:

A) regional integration should initially address a broad, ill-defined area of cooperation.
B) regional integration should not create unconnected or isolated countries.
C) regional integration should compensate the least fortunate.
D) regional integration has advantages and disadvantages.
E) regional integration may reduce the powers of the national government.

Question 27

Of the following statements about regional blocs close to major world markets, which is NOT true?

A) The ASEAN is intensifying its free trade relations with the huge markets in China.
B) India, Japan, and South Korea play an important role in the SAARC.
C) Access to markets is essential for economic growth.
D) The oil-rich regional economy of the Middle East and North Africa has been growing fast and creating jobs for its population.
E) Countries close to major markets have the advantage of connecting to suppliers and ideas.

Question 28

When the various regional integration blocs are analyzed from an economic geography perspective, they fall under three general categories - regional blocs close to major world markets, remote regions with large local markets, or _____.

A) urban regions with small local markets
B) urban regions with large local markets
C) urban regions with no local markets
D) remote regions with small local markets
E) remote regions with no local markets

Question 29

The largest country in the EU, in terms of population, is _____.

A) Denmark
B) Cyprus
C) Italy
D) Turkey
E) Germany

Question 30

According to the text, which of the following is NOT a major world market?

A) The United States
B) The European Union
C) India
D) China
E) Germany

Question 31

In which country is ASEAN headquartered?

A) Indonesia
B) Vietnam
C) Canada
D) Japan
E) India

Question 32

The World Bank's (2009)World Development Report does which of the following?

A) Forecasts the economic surplus of countries based on topography
B) Analyzes trade and regional economic integration through the lens of economic geography
C) Forecasts the economic deficit of countries through population lens
D) Analyzes economies of scale through production cycles
E) Analyzes regional integration blocs

Question 33

In which country is the EU headquartered?

A) Belgium
B) France
C) Germany
D) Italy
E) Turkey

Question 34

Of the following, which is NOT a primary reason why countries are now seeking to pursue regional integration at the expense of multilateral trade liberalization?

A) Uncertainty surrounding the Doha Round
B) Concern that the prospect of creating a truly open global economic system that benefits all countries may recede
C) Some governments may initiate regional pacts
D) Some countries are clamoring for bilateral or regional trade agreements to meet their specific agendas
E) NAFTA is pushing the EU to pursue regional integration

Question 35

A market formed when members of a common market agree to implement common social programs and coordinated macroeconomic policies that would lead to the creation of a single regional currency and a regional apex central bank is known as a(n)_____.

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

Question 36

The Maghreb Union consists of Algeria, Libya, Mauritania, Morocco, and _____.

A) Niger
B) Tunisia
C) Egypt
D) Ethiopia
E) Yemen

Question 37

Of the following, which is NOT a benefit of regional integration?

A) Creating a larger pool of consumers with growing incomes and similar culture, tastes, and social values
B) Encouraging economies of scale in production
C) Reducing the power of the national government
D) Increasing cooperation, peace, and security among nations in the region
E) Encouraging member states the enhance their level of social welfare

Question 38

All of the following statements about the EU are true EXCEPT:

A) it is headquartered in Brussels.
B) it is the most highly evolved example of regional integration in the world.
C) its founding members consisted of ten countries.
D) its origins can be traced to the creation of the European Coal and Steel Community.
E) its eastward enlargement reflects a common past.

Question 39

Which of the following is NOT an objective of NAFTA?

A) The expansion of the trade in goods and services
B) The phased elimination of all trade barriers
C) Protection of intellectual property rights
D) The creation of a uniform currency in North America
E) The creation of institutions to address potential problems

Question 40

Of the following, which is NOT a cost of regional integration?

A) Undermining the most-favored-nation status rule
B) Reducing the powers of the national government
C) Losing sovereignty, national independence, and identity
D) Increasing the probability of rising crime
E) Encouraging economies of scale in production

Question 41

A market formed when member countries of a customs union remove all barriers to allow the movement of capital and labor within the customs union refers to _______.

Question 42

The Treaty of Montevideo created _____.

A) the EU
B) ASEAN
C) LAFTA
D) NAFTA
E) MERCOSUR

Question 43

Of the following statements about ASEAN, which is NOT true?

A) Its current membership stands at 15 countries.
B) It is headquartered in Jakarta, Indonesia.
C) It was established in 1967.
D) It was established by five founding countries.
E) It has a population larger than that of the EU.

Question 44

Explain the pros and cons of regional integration.

Question 45

With the anticipated success of NAFTA, formal discussions to establish a Free Trade Area of the Americas began under the _____ administration.

A) Obama
B) Bush
C) Clinton
D) Reagan
E) Carter

Question 46

The study of principles that govern the efficient spatial allocation of economic resources and the resulting consequences refers to _____.

Question 47

Abolition of restriction on factor movements is part of which stages of regional integration?

A) A customs union and an economic union
B) An economic union and a free trade area
C) A free trade area and a customs union
D) A common market and an economic union
E) A common market and a customs union

Question 48

________ is the union created when member countries of an economic and monetary union work closely with one another to arrive at common defense and foreign policies and behave as a single country.

Question 49

A group of free trade member countries that have adopted a common external tariff with nonmember countries refers to ______.

Question 50

Describe briefly the form and stages of regional integration.

Question 51

________ is an area in which two or more countries agree to eliminate all barriers to trade such as tariffs, quotas, and non-tariff barriers like border restrictions, while at the same time keeping their own external tariffs (within WTO guidelines)against nonmembers.

Question 52

ASEAN's current membership stands at how many countries?

A) 5
B) 10
C) 2
D) 25
E) 30

Question 53

The process of allowing efficient geographic distribution of business activities within and among countries refers to _______.

Question 54

ASEAN has two main objectives: 1)to accelerate economic growth, social progress, and cultural development in the region; and 2)_____.

A) to trade with NAFTA
B) to promote regional peace and stability
C) to cover Asian countries to use of the euro
D) to create more countries in Asia
E) to become a world power

Question 55

Common external tariffs and quota system is part of all of the stages of regional integration EXCEPT which one?

A) A customs union
B) An economic union
C) A free trade area
D) A common market
E) A political union

Question 56

________ refers to a union formed when members of a common market agree to implement common social programs (on education, employee benefits and retraining, health care, etc.)and coordinated macroeconomic policies (such as fiscal and monetary policies)that would lead to the creation of a single regional currency and a regional apex central bank.

Question 57

How does ASEAN differ from the EU?

A) It does NOT call for the free movement of labor across ASEAN.
B) It does call for the free movement of labor across ASEAN.
C) It calls for the establishment of a single market.
D) It calls for the establishment of a production base.
E) It does not differ from the EU.

Question 58

If you are hired as an advisor for countries interested in regional integration, what would be your recommendation for the appropriate approach for these countries? Explain.

Question 59

Implementation of a multitude of economic and/or political steps by member states to increase their global competitiveness, including preferential trade access refers to _______.

Question 60

Of the following, which is NOT true about the future of ASEAN?

A) ASEAN's Vision 2020 calls for aggressive outward-looking economic policies.
B) Several bilateral Free Trade Agreements are currently being implemented.
C) A growing ASEAN concern is the economic ascendancy of North Korea.
D) The ASEAN-Japan Comprehension Economic Partnership agreement covers trade in goods, services, and investment and economic cooperation.
E) The ASEAN Australian-New Zealand FTA was signed in February 2009.

Question 61

Scenario - The Lynnette Company
The Lynette Company was founded in 1982 by Solomon and Andrea Lynette. It is currently based in Jakarta, Indonesia and plans to remain in the region due to the potential for continued market growth. The company provides modern office equipment to customers throughout Southeast Asia and has watched a steady rise in need for its products.
Last year, Lynette grossed over five million dollars in sales. It anticipates gross sales to more than double this year. The Lynette Company is pleased by the ample supply of workers from the local region available to help the company. The owners realize this area of the world has the potential to become an important global market.
Which one of the following would most likely set guidelines for the Lynette Company to follow as it conducts its business in Southeast Asia?

A) European Union
B) NAFTA
C) ASC
D) MERCOSUR
E) ASEAN

Question 62

Scenario - The Lynnette Company
The Lynette Company was founded in 1982 by Solomon and Andrea Lynette. It is currently based in Jakarta, Indonesia and plans to remain in the region due to the potential for continued market growth. The company provides modern office equipment to customers throughout Southeast Asia and has watched a steady rise in need for its products.
Last year, Lynette grossed over five million dollars in sales. It anticipates gross sales to more than double this year. The Lynette Company is pleased by the ample supply of workers from the local region available to help the company. The owners realize this area of the world has the potential to become an important global market.
The Lynette Company's plan to continue its operations within the Asia market offers many benefits as well as challenges. Which one of the following would provide the least degree of challenge for the stability of this company's business operations?

A) Development of a free trade agreement with China
B) The economic rise of China
C) Ability to tap China's declining business market
D) Job loss prevention through a free trade agreement with China
E) Ability to tap China's growing consumer market

Question 63

Scenario - Sarten Gas Company
Established in Salt Lake City, UT in 1975, the Sarten Gas Company (SGC) has grown to be a recognized name in the industry. Since its inception, this company has been able to withstand serious economic downturns in the economy. It has been able to remain financially stable when many others in the industry have struggled with financial losses. The expertise and knowledge of its leaders has led the SGC to be one of the few companies in the industry able to report continued growth.
This excellent track record has inspired the owners of SGC into embracing the idea of expansion. Sarten plans to begin trading with Canada this year and plans to include trading with Mexico within the next three years. The leaders of Sarten Gas feel confident these new trade deals will prove successful for the company and its shareholders.
Which one of the following represents a trade agreement most likely to impact the Sarten Gas Company and its proposed trading partners?

A) NAFTA
B) ASC
C) ASEAN
D) CAFTA
E) NATO

Question 64

Scenario - The Lynnette Company
The Lynette Company was founded in 1982 by Solomon and Andrea Lynette. It is currently based in Jakarta, Indonesia and plans to remain in the region due to the potential for continued market growth. The company provides modern office equipment to customers throughout Southeast Asia and has watched a steady rise in need for its products.
Last year, Lynette grossed over five million dollars in sales. It anticipates gross sales to more than double this year. The Lynette Company is pleased by the ample supply of workers from the local region available to help the company. The owners realize this area of the world has the potential to become an important global market.
All of the following EXCEPT which one represents a founding member of the regional bloc affecting Lynette?

A) Philippines
B) Thailand
C) China
D) Malaysia
E) Singapore

Question 65

Scenario - Sarten Gas Company
Established in Salt Lake City, UT in 1975, the Sarten Gas Company (SGC) has grown to be a recognized name in the industry. Since its inception, this company has been able to withstand serious economic downturns in the economy. It has been able to remain financially stable when many others in the industry have struggled with financial losses. The expertise and knowledge of its leaders has led the SGC to be one of the few companies in the industry able to report continued growth.
This excellent track record has inspired the owners of SGC into embracing the idea of expansion. Sarten plans to begin trading with Canada this year and plans to include trading with Mexico within the next three years. The leaders of Sarten Gas feel confident these new trade deals will prove successful for the company and its shareholders.
Which of the following is not a free trade policy impacting Sarten Gas Company?

A) Phased elimination of all trade barriers
B) Protection of intellectual property
C) Stringent immigration policies
D) Environmental protection standards
E) Protection of workers' rights

Question 66

Compare and contrast EU and NAFTA as regional integration blocs.

Question 67

Scenario - Sarten Gas Company
Established in Salt Lake City, UT in 1975, the Sarten Gas Company (SGC) has grown to be a recognized name in the industry. Since its inception, this company has been able to withstand serious economic downturns in the economy. It has been able to remain financially stable when many others in the industry have struggled with financial losses. The expertise and knowledge of its leaders has led the SGC to be one of the few companies in the industry able to report continued growth.
This excellent track record has inspired the owners of SGC into embracing the idea of expansion. Sarten plans to begin trading with Canada this year and plans to include trading with Mexico within the next three years. The leaders of Sarten Gas feel confident these new trade deals will prove successful for the company and its shareholders.
Given that SGC's home country, the United States, is part of a regional integration bloc that is based on purely economic goals, benefits to these countries would include all but which one of the following?

A) Increase the global competitiveness of each member
B) Surrender of sovereignty of each member
C) Provide a free trade area for the members
D) Eliminate tariffs and non-tariff barriers to trade for the members
E) Provide for the creation of a larger pool of consumers for the members

Question 68

Some argue that Asia may become the most important free trade region for this century. Do you agree? Explain.

Question 69

Scenario - The Lynnette Company
The Lynette Company was founded in 1982 by Solomon and Andrea Lynette. It is currently based in Jakarta, Indonesia and plans to remain in the region due to the potential for continued market growth. The company provides modern office equipment to customers throughout Southeast Asia and has watched a steady rise in need for its products.
Last year, Lynette grossed over five million dollars in sales. It anticipates gross sales to more than double this year. The Lynette Company is pleased by the ample supply of workers from the local region available to help the company. The owners realize this area of the world has the potential to become an important global market.
Which one of the following is not considered a main objective of the regional bloc affecting Lynette?

A) To accelerate economic growth
B) To increase cultural development in the region
C) To encourage regional peace
D) To diminish relationships with major powers
E) To promote stability through the rule of law