Question 1

_______________ is an important reason for economic integration.

Accepted Answer

Geographic proximity often facilitates economic integration by reducing transportation and communication costs, making it easier for countries to trade goods, services, and capital.

Question 2

Neighboring countries tend to collaborate for all of the following reasons EXCEPT:

Accepted Answer

Neighboring countries do not necessarily tend to be in similar economic situations, which means they might not be able to better control currency exchange rates. Economic situations can vary widely even among neighboring countries due to different policies, resources, and development levels.

Question 3

Geographic proximity is an important reason for economic integration because consumer tastes are likely to be:

Accepted Answer

Geographic proximity often leads to economic integration because neighboring countries or regions tend to have similar consumer tastes due to shared culture, climate, and other factors. This similarity in preferences can facilitate trade and economic cooperation.

Question 4

Which of the following types of regional economic integration focuses only on eliminating internal tariffs?

Accepted Answer

A free trade area focuses solely on eliminating tariffs among member countries without adopting a common external tariff policy against non-members, unlike a customs union or more integrated forms.

Question 5

In which of the following types of regional economic integration are internal tariffs eliminated with member countries levying a common external tariff on goods being

Accepted Answer

A customs union involves member countries eliminating tariffs on trade between themselves while also agreeing on a common external tariff on imports from non-member countries.

Question 6

A _______________ focuses on eliminating internal tariffs with member countries levying a common external tariff on goods being imported from nonmembers. Additionally, this type of regional economic integration allows free mobility of production factors such as labor and capital.

Accepted Answer

A common market eliminates internal tariffs, imposes a common external tariff, and allows free movement of labor and capital among member countries.

Question 7

In _______________, countries focus on eliminating internal tariffs among member countries, have a common external trading policy among nonmembers, allow free mobility of productions factors within member countries, and adopt common economic policies.

Accepted Answer

Complete economic integration involves not only the elimination of internal tariffs and a common external trading policy but also the free mobility of production factors and the adoption of common economic policies among member countries.

Question 8

_______________ occurs when production shifts to more efficient producers for reasons of comparative advantage, allowing consumers access to more goods at a lower price than would have been possible without integration.

Accepted Answer

Trade creation occurs when economic integration allows countries to specialize in the production of goods for which they have a comparative advantage, leading to an increase in efficiency and a reduction in prices for consumers.

Question 9

Which of the following was developed with the rationale that the U.S.-Canadian trade was the largest bilateral trade in the world and that the United States is Mexico's and Canada's largest trading partner?

Accepted Answer

NAFTA (the North American Free Trade Agreement) was developed with the rationale to facilitate the massive trade between the U.S., Canada, and Mexico, recognizing the significant economic interdependence among these nations.

Question 10

_______________ occurs when trade shifts to countries in the group at the expense of trade with countries not in the group, even though the nonmember country might be more efficient in the absence of trade barriers.

Accepted Answer

Trade diversion occurs when a trade bloc causes its members to shift their imports from more efficient global producers to less efficient producers within the bloc, due to the preferential treatment (such as reduced tariffs) given to member countries.

Question 11

NAFTA calls for all of the following EXCEPT:

Accepted Answer

NAFTA, the North American Free Trade Agreement, does not call for the implementation of a common currency among its member countries (the United States, Canada, and Mexico). It focuses on trade rules, services, and investment liberalization but does not establish a shared currency.

Question 12

NAFTA is a good example of:

Accepted Answer

NAFTA (North American Free Trade Agreement) is a good example of trade diversion because it redirects trade flows to favor member countries (the United States, Canada, and Mexico) over non-member countries, often due to the removal or reduction of tariffs among the member countries.

Question 13

The _______________ is a political organization comprised of 185 countries, and it is headquartered in New York City. This organization deals with a variety of political issues, such as security and world peace, but it also deals in humanitarian and economic issues.

Accepted Answer

The United Nations (UN) is the correct answer because it is a global organization with 193 member states (as of my last update), headquartered in New York City, that addresses issues of peace, security, humanitarian concerns, and economic development.

Question 14

Where is the headquarters of the EU?

Accepted Answer

The headquarters of the European Union (EU) is located in Brussels, Belgium.

Question 15

Where is the headquarters of the SAARC?

Accepted Answer

The headquarters of the South Asian Association for Regional Cooperation (SAARC) is located in Kathmandu, Nepal.

Question 16

Apart from India, Pakistan and Bangladesh who are the other member countries of SAARC?

Accepted Answer

SAARC (South Asian Association for Regional Cooperation) includes Nepal, Bhutan, Maldives, Sri Lanka, and Afghanistan, in addition to India, Pakistan, and Bangladesh. Thailand, Singapore, and Malaysia are not members of SAARC.

Question 17

Which of the following is not the main purpose for formation of SAARC

Accepted Answer

The main purposes of the South Asian Association for Regional Cooperation (SAARC) include promoting welfare and quality of life for South Asia's people and economic and regional integration. It does not specifically aim to form mutual defense against foreign aggression.

Question 18

SAPTA is a trade agreement by _________________

Accepted Answer

SAPTA stands for the South Asian Preferential Trading Arrangement, which is a trade agreement among the member countries of the South Asian Association for Regional Cooperation (SAARC).

Quiz 8: International Trade and Economic Integration