Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

A(n) _____ involves the free flow of products and factors of production between member countries, the adoption of a common external trade policy, a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy.

Accepted Answer

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

Question 3

Discuss the Maastricht Treaty. What did it accomplish?

Accepted Answer

The Maastricht Treaty, signed in 1991 by EC members, committed signatories to adopting a common currency, the euro, by 1999. The establishment of the euro created the second largest currency zone in the world, second only to the U.S. dollar. While the 12 participating countries locked their exchange rates against each other in 1999, euro notes and coins were not actually issued until 2002. By mid-2002, all prices and routine economic transactions within the euro zone were in euros.

Question 4

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 5

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 6

A common market entails even closer economic integration and cooperation than an economic union.

Accepted Answer

A) True 
 B)False

Question 7

Which is the most enduring free trade area in the world?

Accepted Answer

The most enduring free trade area in the

Question 8

On average, studies indicate that NAFTA's overall impact has been small but positive.

Accepted Answer

A) True 
 B)False

Question 9

The European Parliament is primarily a consultative rather than legislative body.

Accepted Answer

A) True 
 B)False

Question 10

What is ASEAN? What is its basic goal? How successful is ASEAN?

Accepted Answer

The Association of Southeast Asian Natio

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 competition 
A)  higher costs of borrowing 
B)  increase prices 
C)  increase in hedging costs 
D)  increased price competition

Question 12

The judges of the European Court of Justice are required to act as representatives of national interests, rather than as independent officials.

Accepted Answer

A) True 
 B)False

Question 13

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. 
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.

Question 14

Discuss why NAFTA's most significant impact has been a political one, not an economic one.

Accepted Answer

Perhaps the most significant impact of N

Question 15

Since its establishment, the euro has had a stable trading history.

Accepted Answer

A) True 
 B)False

Question 16

The Treaty of Rome, signed in 1957, established the European Free Trade Association.

Accepted Answer

A) True 
 B)False

Question 17

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)  EFTA 
A)  NAFTA 
B)  APEC 
C)  ASEAN 
D)  EFTA

Question 18

What are the five levels of economic integration? Briefly describe each form.

Accepted Answer

There are five levels of economic integr

Question 19

The European Community was established by:

Accepted Answer

A)  the Treaty of Rome signed in 1957. 
B)  the Maastricht Treaty signed in 1991. 
C)  the Maastricht Treaty of 1994. 
D)  the Single European Act of 1987. 
A)  the Treaty of Rome signed in 1957. 
B)  the Maastricht Treaty signed in 1991. 
C)  the Maastricht Treaty of 1994. 
D)  the Single European Act of 1987.

Question 20

Which of the following is a reason why the European Union is considered an imperfect economic union?

Accepted Answer

A)  Factors of production are not allowed to move freely between member countries. 
B)  Not all members of the union have adopted the euro. 
C)  Almost all markets are heavily regulated. 
D)  Products and services are not allowed to move freely between member countries. 
A)  Factors of production are not allowed to move freely between member countries. 
B)  Not all members of the union have adopted the euro. 
C)  Almost all markets are heavily regulated. 
D)  Products and services are not allowed to move freely between member countries.

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

A(n) _____ involves the free flow of products and factors of production between member countries, the adoption of a common external trade policy, a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy.

Discuss the Maastricht Treaty. What did it accomplish?

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

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

A common market entails even closer economic integration and cooperation than an economic union.

Which is the most enduring free trade area in the world?

On average, studies indicate that NAFTA's overall impact has been small but positive.

The European Parliament is primarily a consultative rather than legislative body.

What is ASEAN? What is its basic goal? How successful is ASEAN?

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

The judges of the European Court of Justice are required to act as representatives of national interests, rather than as independent officials.

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?

Discuss why NAFTA's most significant impact has been a political one, not an economic one.

Since its establishment, the euro has had a stable trading history.

The Treaty of Rome, signed in 1957, established the European Free Trade Association.

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

What are the five levels of economic integration? Briefly describe each form.

The European Community was established by:

Which of the following is a reason why the European Union is considered an imperfect economic union?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 9: Regional Economic Integration

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

A(n) _____ involves the free flow of products and factors of production between member countries, the adoption of a common external trade policy, a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy.

Discuss the Maastricht Treaty. What did it accomplish?

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

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

A common market entails even closer economic integration and cooperation than an economic union.

Which is the most enduring free trade area in the world?

On average, studies indicate that NAFTA's overall impact has been small but positive.

The European Parliament is primarily a consultative rather than legislative body.

What is ASEAN? What is its basic goal? How successful is ASEAN?

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

The judges of the European Court of Justice are required to act as representatives of national interests, rather than as independent officials.

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?

Discuss why NAFTA's most significant impact has been a political one, not an economic one.

Since its establishment, the euro has had a stable trading history.

The Treaty of Rome, signed in 1957, established the European Free Trade Association.

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

What are the five levels of economic integration? Briefly describe each form.

The European Community was established by:

Which of the following is a reason why the European Union is considered an imperfect economic union?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters