Question 1

Which of the following is true of the Treaty of Rome?

Accepted Answer

The Treaty of Rome committed the European Community to establish common policies in agriculture and transportation.

Question 2

The European Community was established with the signing in 1957 of the Treaty of

Accepted Answer

The Treaty of Rome was signed in 1957 and established the European Economic Community (EEC), also known as the Common Market. This was one of the predecessor organizations to the current European Union. The treaty was signed by six countries: France, West Germany, Italy, Belgium, the Netherlands, and Luxembourg.

Question 3

As a result of the formation of a free trade area between six member countries in the Pacific Rim,the member country of Rimho found that its lower-cost external suppliers were replaced by higher-cost suppliers within the free trade area.This is an example of

Accepted Answer

This situation is an example of trade diversion, which occurs when lower-cost external suppliers are replaced by higher-cost suppliers within a free trade area. This is because tariffs and trade barriers have been removed between member countries, making it more economically viable for higher-cost suppliers within the free trade area to compete.

Question 4

Which of the following was a major consideration that underlay the establishment of the European Community?

Accepted Answer

The establishment of the European Community was primarily driven by the need for a united Europe to deal with the United States and the Soviet Union, both politically and economically. The European countries wanted to create a stronger economic and political bloc that could compete with the superpowers during the Cold War era. The Common Market, which was the precursor to the European Union, was established in 1957 with six member countries. The European Community later expanded in size and scope to include more member countries and deepen economic and political integration.

Question 5

The Coalition for United Nuntica are opposed to Nuntica joining any regional trading bloc.Which of the following are the two main impediments to regional economic integration that they should emphasize in gaining support for their stance?

Accepted Answer

The two main impediments to regional economic integration that the Coalition for United Nuntica should emphasize are costs and national sovereignty. The Coalition may argue that joining a regional trading bloc will lead to increased costs for businesses and consumers, as they will likely face tariffs, customs duties, and other trade barriers. Additionally, they may argue that joining a regional trading bloc may limit Nuntica's ability to pursue its own economic policies and protect its national sovereignty.

Question 6

Which of the following is responsible for proposing European Union legislation,implementing it,and monitoring compliance with European Union laws by member-states?

Accepted Answer

The European Commission is responsible for proposing European Union legislation, implementing it, and monitoring compliance with European Union laws by member-states. The Council of the European Union and European Parliament are responsible for co-decision making on legislation proposed by the Commission, while the Court of Justice interprets EU law and settles disputes between member-states. The term "European Community" is no longer in use, having been replaced by the term "European Union."

Question 7

As a result of the formation of BERPHO,a free trade area consisting of six member countries,higher cost external fabric producers were replaced by lower-cost external fabric producers within the free trade area.This is known as

Accepted Answer

This is an example of trade creation, which refers to the substitution of higher-cost domestic production with lower-cost imports from within the free trade area.

Question 8

Which of the following is true about the European Commission?

Accepted Answer

The European Commission's competition commissioner is responsible for regulating competition policy in the member nations of the European Union.

Answer: B
 The European Commission is appointed by the Council of the European Union, not the other way around.

Answer: D
 The legislative proposal made by the European Commission must be approved by both the European Parliament and the Council of the European Union before it can become law.

Answer: E
 The European Commission is an important institution within the European Union, but it is not the ultimate controlling authority. The EU has a complex governance system with multiple bodies and institutions that work together to create and enforce laws and policies.

Question 9

The European Community became the European Union in 1993 following the ratification of the

Accepted Answer

The Maastricht Treaty, signed in 1992 and ratified by all EU member states in 1993, officially established the European Union and replaced the European Community as the primary framework for European integration. It created a more powerful and integrated economic and political union among the member states.

Question 10

A regional free trade agreement will benefit the world only if

Accepted Answer

A regional free trade agreement creates trade among its member countries, but there is a risk that it may divert trade away from non-member countries, resulting in a net loss. Therefore, a regional free trade agreement benefits the world only if the amount of trade it creates exceeds the amount it diverts, ensuring a positive impact on global trade. Foreign exchange rates, balance-of-trade situations, and trade surpluses for individual countries are not reliable indicators of the overall impact of a regional free trade agreement on the world.

Question 11

Suppose the country of Ceria and Lithinia imposed tariffs on imports from all countries,and then they set up a free trade area,scrapping all trade barriers between themselves but maintaining tariffs on imports from the rest of the world.Now,Ceria begins to import sugar from Lithinia.However,Ceria had previously been importing sugar from another country,Cadnia,which produced sugar more cheaply than Ceria or Lithinia.This is an example of

Accepted Answer

This is an example of trade diversion, as Ceria is now importing sugar from Lithinia instead of Cadnia, which previously offered a cheaper option. The free trade area between Ceria and Lithinia has diverted Ceria's trade from a more efficient producer to a less efficient one, resulting in higher costs for Ceria's consumers.

Question 12

The country of Argonia and the country of Berylia imposed tariffs on imports from all countries.They set up a free trade area,removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world.Argonia now begins to import sugar from Berylia.Previously,Argonia was indigenously producing sugar at a higher cost.Thus,Argonia benefits from this transaction.This is known as

Accepted Answer

This scenario is an example of trade creation, as the free trade agreement between Argonia and Berylia allows for the import of sugar at a lower cost, creating benefits for Argonia. Trade diversion would occur if Argonia stopped importing sugar from a more efficient producer outside of the free trade agreement and instead imported it from Berylia, regardless of cost. Strategic pricing and synergy are unrelated concepts, and protectionism would involve the imposition of trade barriers rather than the removal of them.

Question 13

Which of the following are significant trade blocs in Europe?

Accepted Answer

The European Union (EU) and the European Free Trade Association (EFTA) are both significant trade blocs in Europe. The EU is a political and economic union of 27 member states, while EFTA is a regional trade organization consisting of Iceland, Liechtenstein, Norway, and Switzerland. The other options listed are not actual trade blocs in Europe.

Question 14

After the formation of BERPHO,a free trade area for its member countries,Nuntica found that its high-cost domestic producers were replaced by low-cost producers within the free trade area.This is an example of

Accepted Answer

Trade creation occurs when the formation of a free trade area leads to the replacement of high-cost domestic production with lower-cost imports from member countries, resulting in more efficient resource allocation and increased trade among the member countries.

Question 15

Ghom Nartico,the head of state of Nuntica,wants to make a political case for regional economic integration to his electorate.Which of the following would be a valid statement for Nartico to make?

Accepted Answer

Countries can enhance their political weight in the world by grouping their economies.

Question 16

Which of the following supports the economic case for regional economic integration?

Accepted Answer

Coordination and policy harmonization problems increase with the number of countries involved, making regional integration among fewer countries more manageable and beneficial.

Question 17

Which of the following is a factor that resulted in the establishment of the European Union (EU)?

Accepted Answer

The devastation caused by two world wars in Western Europe created a strong desire for lasting peace, which was a significant factor in the establishment of the European Union. The other choices, such as NAFTA and the oil crisis, are not directly related to the formation of the EU.

Question 18

Which of the following is an example of concerns over national sovereignty acting as an impediment to regional economic integration?

Accepted Answer

Great Britain's refusal to adopt the euro is an example of concerns over national sovereignty acting as an impediment to regional economic integration. By maintaining its own currency, Great Britain retains control over its monetary policy and economic sovereignty. This reflects a reluctance to cede decision-making powers to a larger regional body, which is a common concern for countries considering economic integration.

Question 19

Which of the following institutions has a monopoly in proposing European Union legislation?

Accepted Answer

The European Commission has the sole right of initiative in proposing legislation in the European Union. The Commission, which is comprised of one representative from each member state, is responsible for drafting legislative proposals and presenting them to the Council of the European Union and the European Parliament for consideration.

Question 20

The goal of ESASME,an economic union,is to have a Council of Ministers that would coordinate the economic,social,and foreign policy of the member-states.ESASME wants to be a

Accepted Answer

The goal of having a Council of Ministers that coordinates not only economic but also social and foreign policy indicates that ESASME desires to have a higher level of political integration. A political union involves a deeper level of integration where member-states delegate a significant degree of decision-making power to a central authority. This is different from the other options provided such as a free trade area, regional union, common market, and command economy, which do not necessarily involve a centralized decision-making body for economic, social, and foreign policy.

Quiz 9: Regional Economic Integration