Question 1

All of the following statements are true about Mercosur EXCEPT that:

Accepted Answer

Germany is not a member of Mercosur. Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay are members of Mercosur.

Question 2

Bahamas is a member of _____.

Accepted Answer

Bahamas is a member of CARICOM (Caribbean Community and Common Market). Refer to Exhibit 9.7-American Regions Fundamental Market Metrics.

Question 3

The long-term goal of the LAIA (Latin American Integration Association), better known by its Spanish acronym, ALADI, is:

Accepted Answer

The long-term goal of the LAIA, better known by its Spanish acronym, ALADI, is a gradual and progressive establishment of a Latin American common market.

Question 4

Which of the following statements is true about NAFTA?

Accepted Answer

NAFTA provisions on services state that both U.S. and Canadian financial institutions are permitted to open wholly owned subsidiaries in Mexico, and all restrictions on the services they offer will be lifted. Refer to Exhibit 9.6-Key Provisions of NAFTA.

Question 5

Which of the following key provisions of NAFTA restricts Japan from assembling autos in Mexico and avoiding U.S. or Canadian tariffs and quotas, unless the auto had a specific percentage of Mexican (i.e., North American) content?

Accepted Answer

According to rules of origin, for goods to be traded duty free, they must contain substantial (62.5 percent) North American content. Refer to Exhibit 9.6-Key Provisions of NAFTA.

Question 6

NAFTA differs from Mercosur in that NAFTA:

Accepted Answer

NAFTA is a comprehensive trade agreement that addresses, and in most cases improves, all aspects of doing business within North America. Mercosur (including Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay) is the second-largest common-market agreement in the Americas after NAFTA.

Question 7

Given the fact that NAFTA is now effective among the U.S., Mexico, and Canada, an American company which has its production plant in Sri Lanka will be willing to relocate its production plant to Mexico mostly because:

Accepted Answer

Wages in Mexico are almost three times the monthly wages in Sri Lanka, but moving goods from Mexico to the United States is cheaper and faster than moving them from Sri Lanka.

Question 8

Which of the following countries is a member of the free trade agreement DR-CAFTA?

Accepted Answer

In August 2005, President George Bush signed into law a comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States. This free trade agreement is known as DR-CAFTA.

Question 9

CARICOM established the CSME (CARICOM Single Market and Economy) with the major goal of:

Accepted Answer

CARICOM has worked toward a single-market economy and in 2000 established the CSME (CARICOM Single Market and Economy) with the goal of a common currency for all members. The introduction of a common external tariff structure was a major step toward that goal.

Question 10

Which of the following is true of state ownership?

Accepted Answer

State ownership was once considered the ideal engine for economic growth. Instead of economic growth, however, they ended up with inflated public-sector bureaucracies, complicated and unpredictable regulatory environments, the outright exclusion of foreign and domestic private ownership, and inefficient public companies.

Question 11

Which of the following countries is NOT a member of the Caribbean Community and Common Market (CARICOM)?

Accepted Answer

Guatemala is not a member of CARICOM. Refer exhibit 9.7- American Regions Fundamental Market Metrics.

Question 12

Which is the comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States that includes a wide array of tariff reductions aimed at increasing trade and employment?

Accepted Answer

In August 2005, President George Bush signed into law a comprehensive free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States. The agreement includes a wide array of tariff reductions aimed at increasing trade and employment among the seven signatories.

Question 13

Which of the following is the second-largest common-market agreement in the Americas?

Accepted Answer

Mercosur is the second-largest common-market agreement in the Americas.

Question 14

Which of the following countries is a member of the Latin American Integration Association (LAIA, aka ALADI)?

Accepted Answer

Cuba is a member of Latin American Integration Association. Refer to Exhibit 9.7-American Regions Fundamental Market Metrics.

Question 15

Which of the following accounts for the lion's share of Mercosur exports to Europe?

Accepted Answer

The advantages of the accord to Mercosur will mainly come from lifting trade barriers on agricultural and agro-industrial products, which account for the lion's share of Mercosur exports to Europe.

Question 16

_____ required the United States, Canada, and Mexico to remove all tariffs and trade barriers over 15 years, and beginning in 2008, all tariff barriers were officially dropped.

Accepted Answer

NAFTA required the United States, Canada, and Mexico to remove all tariffs and trade barriers over 15 years, and beginning in 2008, all tariff barriers were officially dropped.

Question 17

Which of the following is the largest common-market agreement in the Americas?

Accepted Answer

NAFTA is the largest common-market agreement in the Americas.

Question 18

Which of the following treaties provided the legal basis for Mercosur?

Accepted Answer

The Treaty of Asunción, which provided the legal basis for Mercosur, was signed in 1991 and formally inaugurated in 1995.

Question 19

In the context of Latin American trade progress, which of the following was a result of state ownership?

Accepted Answer