Question 1

Explain why differences in culture can limit the ability of companies to centralize production in key locations. Provide an example.

Accepted Answer

It is important to recognize that even a...

Question 2

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) All of the above
G) None of the above

Question 3

After the formation of a free trade area for its member countries, the United States found that its high-cost furniture producers in North Carolina were replaced by low-cost producers from another country 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) B) and C)
G) C) and D)

Question 4

Two neighboring countries have the same wage rates, tax regimes, and business cycles. In addition, the two countries have reacted similarly to past economic shocks. These two countries can adopt a common currency because they form 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) A) and E)
G) B) and D)

Question 5

One result of the Single European Act was that it

Accepted Answer

A)   proposed to place frontier controls among European Community countries.
B)   sought to abolish the application of the principle of "mutual recognition" to product standards.
C)   proposed to reduce costs indirectly by preventing national suppliers to compete.
D)   provided the impetus for the restructuring of substantial sections of European industry.
E)   proposed to reduce costs directly by preventing lower-cost suppliers into national economies.F) A) and B)
G) All of the above

Question 6

One reason for the establishment of the European Community in 1957 was the

Accepted Answer

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

Question 7

What is a defining characteristic of a free trade area?

Accepted Answer

A)   Factors of production are allowed to move freely between member nations.
B)   Each member country is allowed to determine its own trade policies with regard to nonmembers.
C)   Member nations are required to have a common currency.
D)   Member nations are required to have a common monetary and fiscal policy.
E)   Member nations are required to have a central political apparatus that coordinates economic, social, and foreign policy.F) A) and E)
G) D) and E)

Question 8

A firm that operates outside of a trading bloc will likely face the improved position of competitors within the trading bloc.

Accepted Answer

A) True 
 B)False

Question 9

Within a(n)  ________, there is a level of economic integration that involves the use of a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy.

Accepted Answer

A)   free trade area
B)   customs union
C)   common market
D)   economic union
E)   command economyF) A) and E)
G) D) and E)

Question 10

The goal of a new Central American group formed as an economic union is to have a Council of Ministers that would coordinate the economic, social, and foreign policy of the member states. This group wants to be a

Accepted Answer

A)   free trade area.
B)   political union.
C)   regional union.
D)   common market.
E)   command economy.F) A) and C)
G) A) and E) B

Question 11

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

Accepted Answer

A)   Paris.
B)   Brussels.
C)   Switzerland.
D)   Rome.
E)   Lisbon.F) A) and E)
G) C) and D)

Question 12

The Andean Community now operates as a customs union.

Accepted Answer

A) True 
 B)False

Question 13

The six countries on the northern side of the Pacific Rim agreed to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other. The agreement among these countries is referred to as

Accepted Answer

A)   regional economic integration.
B)   cross-cultural integration.
C)   a zoning agreement.
D)   administrative trade policies.
E)   a balance-of-trade equilibrium.F) A) and B)
G) None of the above

Question 14

What caused the Central American Common Market to collapse in 1969?

Accepted Answer

A)   the devaluation of the Brazilian currency by 40 percent
B)   a coup in Nicaragua that led to the overthrow of the incumbent regime
C)   war between Honduras and El Salvador after a riot at a soccer match between teams from the two countries
D)   the withdrawal from the trade arrangement by Costa Rica
E)   the collapse of monetary policy between Costa Rica and El SalvadorF) B) and C)
G) B) and E)

Question 15

The price of a bouquet of tulips in France is 4 euros. Jenna Algren, a frequent international traveler, found that a similar bouquet of tulips cost only 3 euros in Belgium. This demonstrates that the benefit of adopting the euro as a common currency is that it

Accepted Answer

A)   makes it easier to compare prices across Europe.
B)   makes Europe an optimal currency area.
C)   increases the range of investment options open only to institutions.
D)   leads to higher prices, which translate into substantial gains for European producers.
E)   decreases competition because it has become harder for consumers to shop around.F) A) and B)
G) B) and E)

Question 16

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

Accepted Answer

A)   Africa
B)   South America
C)   North America
D)   Europe
E)   AsiaF) All of the above
G) A) and C) D

Question 17

By adopting the euro, the European Union has created the most widely-traded currency in the world.

Accepted Answer

A) True 
 B)False

Question 18

The European Parliament is appointed by the prime ministers of each member state.

Accepted Answer

A) True 
 B)False

Question 19

Brett Thiesen wants to make a political case for regional economic integration to his electorate. Which valid statement can he make in this regard?

Accepted Answer

A)   Linking neighboring economies increases the potential for violent conflict.
B)   Free trade stimulates economic growth, which creates dynamic gains from trade.
C)   Making neighboring economies increasingly dependent on each other fails to create incentives for political cooperation.
D)   Countries can enhance their political weight in the world by grouping their economies.
E)   Those seeking a united Europe have always had a desire to make another war in Europe imminent.F) B) and D)
G) A) and E)

Question 20

The adoption of a common currency, the euro, makes it easier to compare prices across Europe, which has resulted in increased competition.

Accepted Answer

A) True 
 B)False

Exam 9: Regional Economic Integration

Explain why differences in culture can limit the ability of companies to centralize production in key locations. Provide an example.

Correct AnswerverifiedIt is important to recognize that even a...View AnswerShow Answer

A regional free trade agreement will benefit the world only if

Correct AnswerverifiedShow Answer

After the formation of a free trade area for its member countries, the United States found that its high-cost furniture producers in North Carolina were replaced by low-cost producers from another country within the free trade area. This is an example of

Correct AnswerverifiedShow Answer

Two neighboring countries have the same wage rates, tax regimes, and business cycles. In addition, the two countries have reacted similarly to past economic shocks. These two countries can adopt a common currency because they form a(n)

Correct AnswerverifiedShow Answer

One result of the Single European Act was that it

Correct AnswerverifiedShow Answer

One reason for the establishment of the European Community in 1957 was the

Correct AnswerverifiedB

What is a defining characteristic of a free trade area?

Correct AnswerverifiedShow Answer

A firm that operates outside of a trading bloc will likely face the improved position of competitors within the trading bloc.

Correct AnswerverifiedShow Answer

Within a(n) ________, there is a level of economic integration that involves the use of a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy.

Correct AnswerverifiedShow Answer

The goal of a new Central American group formed as an economic union is to have a Council of Ministers that would coordinate the economic, social, and foreign policy of the member states. This group wants to be a

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

The Andean Community now operates as a customs union.

Correct AnswerverifiedShow Answer

The six countries on the northern side of the Pacific Rim agreed to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other. The agreement among these countries is referred to as

Correct AnswerverifiedShow Answer

What caused the Central American Common Market to collapse in 1969?

Correct AnswerverifiedShow Answer

The price of a bouquet of tulips in France is 4 euros. Jenna Algren, a frequent international traveler, found that a similar bouquet of tulips cost only 3 euros in Belgium. This demonstrates that the benefit of adopting the euro as a common currency is that it

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

By adopting the euro, the European Union has created the most widely-traded currency in the world.

Correct AnswerverifiedShow Answer

The European Parliament is appointed by the prime ministers of each member state.

Correct AnswerverifiedShow Answer

Brett Thiesen wants to make a political case for regional economic integration to his electorate. Which valid statement can he make in this regard?

Correct AnswerverifiedShow Answer

The adoption of a common currency, the euro, makes it easier to compare prices across Europe, which has resulted in increased competition.

Correct AnswerverifiedShow Answer

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It is important to recognize that even a...
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B

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D

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