Question 1

_____ occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area.

Accepted Answer

A)   Trade deficit
B)   Trade diversion
C)   Trade creation
D)   Trade distortionE) B) and C)
F) B) and D)

Question 2

A key benefit resulting from the adoption of the euro is the ability to compare prices across member markets.

Accepted Answer

A) True 
 B)False

Question 3

From least integrated to most integrated,the levels of economic integration are:

Accepted Answer

A)   a common market, a free trade area, an economic union, a customs union, and a political union.
B)   a free trade area, a customs union, a common market, an economic union, and a political union.
C)   a customs union, a free trade area, a common market, a political union, and an economic union.
D)   a common market, an economic union, a customs union, a free trade area, and a political union.E) B) and C)
F) C) and D)

Question 4

What is the political case for integration? How did political arguments influence the establishment of the European Union?

Accepted Answer

Linking neighboring economies and making...

Question 5

Which feature of an economic union differentiates it from a common market?

Accepted Answer

A)   Free flow of products and factors of production between member countries
B)   A common monetary and fiscal policy
C)   A common external trade policy toward nonmembers
D)   Ability of factors of production to move freely between membersE) A) and B)
F) A) and C)

Question 6

Three countries agree to remove barriers to trade between member countries and adopt a common external trade policy toward nonmembers.They also agree to allow people and other factors of production to move freely across their borders.Which level of economic integration is this an example of?

Accepted Answer

A)   Bonded market
B)   Customs union
C)   Free trade area
D)   Common marketE) B) and C)
F) A) and D)

Question 7

Which of the following is seen to be a consequence of the size of the EU from 15 nations to 27 nations?

Accepted Answer

A)   Delays in the decision-making processes
B)   Elimination of the sovereign debt crisis
C)   Euro becoming the most traded currency in the world
D)   Huge initial impact on the overall economic welfareE) A) and B)
F) C) and D)

Question 8

In theory,WTO rules should ensure that a free trade agreement results in trade diversion.

Accepted Answer

A) True 
 B)False

Question 9

Trade diversion occurs when higher-cost external producers are replaced by lower-cost external producers within the free trade area.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following accounts for about 55 percent of the world's GNP and 49 percent of world trade?

Accepted Answer

A)   NAFTA
B)   APEC
C)   ASEAN
D)   EFTAE) All of the above
F) B) and C)

Question 11

The lowering of barriers to trade and investment between countries is likely to lead to _____ throughout the EU.

Accepted Answer

A)   higher costs of borrowing
B)   increase prices
C)   increase in hedging costs
D)   increased price competitionE) None of the above
F) B) and C)

Question 12

Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than legislative body?

Accepted Answer

A)   The European Parliament
B)   The European Commission
C)   The Council of the European Union
D)   The Court of JusticeE) All of the above
F) A) and B)

Question 13

Which feature of a common market differentiates it from a customs union?

Accepted Answer

A)   Harmonization of members' tax rates
B)   A common currency
C)   A common external trade policy toward nonmembers
D)   Ability of factors of production to move freely between membersE) All of the above
F) A) and C)

Question 14

Which feature of a customs union differentiates it from a free trade area?

Accepted Answer

A)   Harmonization of members' tax rates
B)   A common currency
C)   A common external trade policy toward nonmembers
D)   Ability of factors of production to move freely between membersE) B) and D)
F) A) and B)

Question 15

There are two main trading blocs in Europe,the European Union and the European Free Trade Association.

Accepted Answer

A) True 
 B)False

Question 16

A benefit to companies of economic integration is the opportunity to centralize their production and reduce costs.

Accepted Answer

A) True 
 B)False

Question 17

The bulk of intra-ASEAN trade consisted of goods whose tariffs had been reduced through an ASEAN preferential trade arrangement.

Accepted Answer

A) True 
 B)False

Question 18

A regional free trade agreement will benefit the world only when the amount of trade it creates exceeds the amount of trade it diverts.

Accepted Answer

A) True 
 B)False

Question 19

Discuss the trend toward increased regional economic integration.

Accepted Answer

In recent years,there has been a strong ...

Question 20

Which of the following explains why economic integration has never been easy to achieve or sustain,despite the strong economic and political arguments in support?

Accepted Answer

A)   No country has shown significant improvement because of economic integration.
B)   Countries fear a reduction of their political weight in the world because of economic integration.
C)   Linking neighboring economies and making them increasingly dependent on each other creates little incentives for political cooperation.
D)   While a nation as a whole may benefit significantly, certain groups may lose.E) C) and D)
F) A) and D)

Exam 9: Regional Trade Pacts Give the Mexican Auto Industry an Edge

Trade diversion occurs when higher-cost external producers are replaced by lower-cost external producers within the free trade area.

Correct AnswerverifiedShow Answer

Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than legislative body?

Correct AnswerverifiedShow Answer

Which of the following accounts for about 55 percent of the world's GNP and 49 percent of world trade?

Correct AnswerverifiedShow Answer

_____ occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area.

Correct AnswerverifiedShow Answer

Which feature of an economic union differentiates it from a common market?

Correct AnswerverifiedShow Answer

What is the political case for integration? How did political arguments influence the establishment of the European Union?

Correct AnswerverifiedLinking neighboring economies and making...View AnswerShow Answer

A key benefit resulting from the adoption of the euro is the ability to compare prices across member markets.

Correct AnswerverifiedShow Answer

Which feature of a customs union differentiates it from a free trade area?

Correct AnswerverifiedShow Answer

Which of the following is seen to be a consequence of the size of the EU from 15 nations to 27 nations?

Correct AnswerverifiedShow Answer

Which of the following explains why economic integration has never been easy to achieve or sustain,despite the strong economic and political arguments in support?

Correct AnswerverifiedShow Answer

Discuss the trend toward increased regional economic integration.

Correct AnswerverifiedIn recent years,there has been a strong ...View AnswerShow Answer

Which feature of a common market differentiates it from a customs union?

Correct AnswerverifiedShow Answer

A regional free trade agreement will benefit the world only when the amount of trade it creates exceeds the amount of trade it diverts.

Correct AnswerverifiedShow Answer

There are two main trading blocs in Europe,the European Union and the European Free Trade Association.

Correct AnswerverifiedShow Answer

From least integrated to most integrated,the levels of economic integration are:

Correct AnswerverifiedShow Answer

A benefit to companies of economic integration is the opportunity to centralize their production and reduce costs.

Correct AnswerverifiedShow Answer

Three countries agree to remove barriers to trade between member countries and adopt a common external trade policy toward nonmembers.They also agree to allow people and other factors of production to move freely across their borders.Which level of economic integration is this an example of?

Correct AnswerverifiedShow Answer

The lowering of barriers to trade and investment between countries is likely to lead to _____ throughout the EU.

Correct AnswerverifiedShow Answer

The bulk of intra-ASEAN trade consisted of goods whose tariffs had been reduced through an ASEAN preferential trade arrangement.

Correct AnswerverifiedShow Answer

In theory,WTO rules should ensure that a free trade agreement results in trade diversion.

Correct AnswerverifiedShow Answer

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Linking neighboring economies and making...
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In recent years,there has been a strong ...
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