Question 1

A regional free trade agreement will benefit the world only if

Accepted Answer

A)  it raises the standard of living in one of the member countries.
B)  the amount of trade it creates exceeds the amount it diverts.
C)  the currencies of the nations involved appreciate.
D)  the balance-of-trade situation remains stable in the region.
E)  it creates trade surplus for one of the countries involved.F) A) and E)
G) A) and B)

Question 2

The Central America Free Trade Agreement (CAFTA) is a 2004 agreement between the members of the Central American Common Market and

Accepted Answer

A)  the United States.
B)  Canada.
C)  the European Union.
D)  Mexico.
E)  Brazil.F) A) and E)
G) B) and E)

Question 3

SMEAN is an economic union of six geographically close countries.Which of the following is true with regard to SMEAN?

Accepted Answer

A)  There are restrictions on immigration,emigration,or cross-border flow of capital among member countries.
B)  It allows member countries to have their own individualized currency.
C)  It involves the free flow of products and factors of production among member countries.
D)  It has a central political apparatus that coordinates the economic,social,and foreign policy of the member-states.
E)  It does not have a common external trade policy.F) A) and B)
G) B) and D)

Question 4

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

Accepted Answer

A)  It obliged all European Union members to adopt the euro.
B)  It committed the European Community to establish common policies in agriculture and transportation.
C)  It called for the establishment of internal trade barriers.
D)  It allowed members to determine the level of protection applied to goods coming from outside.
E)  It called for the abolition of a common external tariff.F) A) and E)
G) A) and D)

Question 5

Over time the euro will impact the pan-European capital market by leading to

Accepted Answer

A)  an increase in the cost of capital.
B)  a decline in the overall level of savings and investment.
C)  an increased efficiency with which investment funds are allocated.
D)  reduced liquidity in the market.
E)  reduced competition among European producers.F) B) and C)
G) C) and D)

Question 6

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

Accepted Answer

A)  The pressing need to have a common currency that would make trade between European and non-European countries easier
B)  The need for a united Europe to deal with the United States and the politically alien Soviet Union
C)  The economic lessons from the Great Depression that hit the United States in the 1920s
D)  The success of the European Free Trade Association formed by Western European countries in 1960
E)  The rise of communism in Europe in the 1960sF) A) and B)
G) B) and E)

Question 7

Which of the following is true about the European Parliament?

Accepted Answer

A)  It cannot propose amendments to legislations.
B)  It is directly elected by the populations of the member-states.
C)  It is primarily a legislative body rather than a consultative body.
D)  It does not have the right to veto laws such as single-market legislation.
E)  The European Parliament does not have the right to vote on the appointment of commissioners.F) C) and E)
G) D) and E)

Question 8

The _____ was an attempt to establish a free trade area between Brunei,Cambodia,Indonesia,Laos,Malaysia,Myanmar,Philippines,Singapore,Thailand,and Vietnam.

Accepted Answer

A)  Asia-Pacific Economic Cooperation
B)  South Asian Association for Regional Cooperation
C)  Asian Clearing Union
D)  Association of Southeast Asian Nations
E)  Maastricht TreatyF) D) and E)
G) A) and C)

Question 9

In theory,the World Trade Organization rules should ensure that a free trade agreement results in trade diversion.

Accepted Answer

A) True 
 B)False

Question 10

An argument against the North American Free Trade Agreement centered on the fear that ratification would result in

Accepted Answer

A)  low interest rates in the Unites States and Canada.
B)  mass exodus of jobs from the United States into Mexico.
C)  a move toward a common currency for NAFTA member nations.
D)  competition from the members of the European Union.
E)  high inflation in the United States and Canada.F) D) and E)
G) A) and C)

Question 11

Where has the movement toward regional economic integration been most successful?

Accepted Answer

A)  Africa
B)  South America
C)  North America
D)  Europe
E)  AsiaF) A) and E)
G) B) and E)

Question 12

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

A)  value creation.
B)  strategic pricing.
C)  trade creation.
D)  trade diversion.
E)  economic exposure.F) A) and D)
G) A) and C)

Question 13

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

Accepted Answer

A)  International institutions such as the World Trade Organization have been moving the world away from a free trade regime.
B)  The greater the number of countries involved in a free trade agreement,the fewer the perspectives that must be reconciled.
C)  Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement.
D)  It is difficult to establish a free trade and investment regime among a limited number of adjacent countries as compared to the world community.
E)  Since most governments do not intervene,unrestricted free trade and FDI have become a reality.F) C) and D)
G) A) and E)

Question 14

Which of the following meets in Strasbourg,France,is primarily a consultative rather than a legislative body,and debates legislation proposed by the commission and forwarded to it by the council?

Accepted Answer

A)  European Parliament
B)  European Central Bank
C)  Court of Justice
D)  European Free Trade Association
E)  European CommunityF) A) and D)
G) C) and D)

Question 15

The euro zone is comprised of the

Accepted Answer

A)  27 member nations of the European Union
B)  member nations of the European Union and the applicants to the union
C)  19 member nations who use the euro as their currency
D)  member nations of the European Union and countries who have pegged their currencies to the euro
E)  21 member nations that have their members in the European ParliamentF) None of the above
G) C) and E)

Question 16

Describe the Central American Common Market and the Central America Free Trade Agreement.

Accepted Answer

In the early 1960s,Costa Rica,El Salvado...

Question 17

What were the objectives of the Single European Act?

Accepted Answer

The purpose of the Single European Act w...

Question 18

The _____ is a 1969 agreement among Bolivia,Chile,Ecuador,Colombia,and Peru to establish a customs union.

Accepted Answer

A)  Andean Pact
B)  ASEAN
C)  Mercosur
D)  CARICOM
E)  Caribbean Single Market and EconomyF) All of the above
G) None of the above

Question 19

Finland and Portugal have different wage rates,tax regimes,and business cycles.The two countries have also reacted differently in the past to external economic shocks.The dissimilarities are an example of one of the drawbacks of the euro that economists refer to as the EU not being in a(n)

Accepted Answer

A)  managed currency zone.
B)  open exchange regime.
C)  optimal currency area.
D)  free trade area.
E)  advanced monetary zone.F) All of the above
G) A) and E)

Question 20

Establishment of the euro required participating national governments to

Accepted Answer

A)  have a sound fiscal situation.
B)  have stable exchange rates.
C)  be democratic in nature.
D)  give up control over monetary policy.
E)  have a high degree of price stability.F) A) and B)
G) A) and C)

Exam 9: Regional Economic Integration

Finland and Portugal have different wage rates,tax regimes,and business cycles.The two countries have also reacted differently in the past to external economic shocks.The dissimilarities are an example of one of the drawbacks of the euro that economists refer to as the EU not being in a(n)

Correct AnswerverifiedShow Answer

Which of the following is true about the European Parliament?

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A regional free trade agreement will benefit the world only if

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SMEAN is an economic union of six geographically close countries.Which of the following is true with regard to SMEAN?

Correct AnswerverifiedShow Answer

Establishment of the euro required participating national governments to

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The euro zone is comprised of the

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Which of the following meets in Strasbourg,France,is primarily a consultative rather than a legislative body,and debates legislation proposed by the commission and forwarded to it by the council?

Correct AnswerverifiedShow Answer

What were the objectives of the Single European Act?

Correct AnswerverifiedThe purpose of the Single European Act w...View AnswerShow Answer

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

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The _____ is a 1969 agreement among Bolivia,Chile,Ecuador,Colombia,and Peru to establish a customs union.

Correct AnswerverifiedShow Answer

An argument against the North American Free Trade Agreement centered on the fear that ratification would result in

Correct AnswerverifiedShow Answer

Describe the Central American Common Market and the Central America Free Trade Agreement.

Correct AnswerverifiedIn the early 1960s,Costa Rica,El Salvado...View AnswerShow Answer

The Central America Free Trade Agreement (CAFTA) is a 2004 agreement between the members of the Central American Common Market and

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Where has the movement toward regional economic integration been most successful?

Correct AnswerverifiedShow Answer

In theory,the World Trade Organization rules should ensure that a free trade agreement results in trade diversion.

Correct AnswerverifiedShow Answer

The _____ was an attempt to establish a free trade area between Brunei,Cambodia,Indonesia,Laos,Malaysia,Myanmar,Philippines,Singapore,Thailand,and Vietnam.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Over time the euro will impact the pan-European capital market by leading to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The purpose of the Single European Act w...
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In the early 1960s,Costa Rica,El Salvado...
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