Chapter 9 Regional Economic Integration – Flashcards
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Which of the following refers to agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other?
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Regional economic integration
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Which of the following is true with regard to regional economic integration?
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Regional economic integration is good for consumers because it lowers prices.
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Where has the movement toward regional economic integration been most successful?
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Europe
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Which of the following is the economic level corresponding to the least integration?
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A free trade area
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Which of the following is defined as a group of countries committed to removing all barriers to the free flow of goods and services between each other, but pursuing independent external trade policies?
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Free trade area
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Which of the following is true of the European Free Trade Association (EFTA)?
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It was founded by those western European countries that initially decided not to be part of the
European Community.
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Three countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common trade policy with regard to nonmembers. Faced with political backlash, the countries stop short of allowing mobility of factors of production such as labor and capital. Which of the following levels of economic integration best describes this arrangement?
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Customs union
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Which of the following has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members?
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common market
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Which of the following is a feature of a common market?
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free movement of factors of production between member nations
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Which of the following entails a closer economic integration and cooperation than a common market?
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Economic union
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Which of the following levels of economic integration involves the use of a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy?
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Economic union
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Which of the following is defined as a central political apparatus that coordinates the economic, social, and foreign policy of the member-states?
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Political union
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Which of the following supports the economic case for regional economic integration?
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Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement.
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Which of the following is true of the political case for regional economic integration?
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Countries can enhance their political weight in the world by grouping their economies.
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Which of the following is a major consideration that underlay the establishment of the European Community?
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The need for a united Europe to deal with the United States and the politically alien Soviet Union
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Which of the following are the two impediments to regional economic integration?
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Costs and national sovereignty
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Which of the following is an example of concerns over national sovereignty acting as an impediment to regional economic integration?
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Great Britain refusing to adopt the common currency of the European Union, the euro
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A regional free trade agreement will benefit the world only if:
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the amount of trade it creates exceeds the amount it diverts
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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:
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trade creation
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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 known as:
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trade diversion
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Which of the following is a factor that resulted in the establishment of the European Union (EU)?
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The devastation of Western Europe during two world wars and the desire for a lasting peace
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The European Community was established with the signing in 1957 of the Treaty of:
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Treaty of Rome
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The European Community became the European Union in 1993 following the ratification of the:
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Maastricht Treaty
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Which of the following is true of the Treaty of Rome?
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It committed the European Community to establish common policies in agriculture and
transportation
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Which of the following is considered to be the ultimate controlling authority within the European Union?
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European Council
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The European Council is considered to be the ultimate controlling authority within the European Union (EU) because:
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draft legislation from the European Commission can become EU law only if the council agrees
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Which of the following has 754 members as of 2014, and is directly elected by the populations of the member-states?
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European Parliament
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Which of the following countries has adopted the euro as its currency?
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France
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Over time the euro will impact the pan-European capital market by leading to:
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an increased efficiency with which investment funds are allocated
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Which of the following refers to a permanent bailout fund, worth about €500 billion, set up by the euro zone nations to restore confidence in the euro?
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European Stability Mechanism
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Which of the following is true of the provisions of the North American Free Trade Agreement?
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It seeks the removal of most barriers on the cross-border flow of services
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Which of the following is an expected consequence of the implementation of the North American Free Trade Agreement?
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Some U.S. and Canadian firms would move production to Mexico to take advantage of lower
labor costs
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An argument against the North American Free Trade Agreement centered on the fear that ratification would result in:
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mass exodus of jobs from the United States into Mexico
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Which of the following is a significant impact of the North American Free Trade Agreement (NAFTA)?
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It helped create the background for increased political stability in Mexico
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Which of the following is a major issue confronting the North American Free Trade Agreement?
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Expanding the membership of the agreement
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Which of the following refers to a 1969 agreement among Bolivia, Chile, Ecuador, Colombia, and Peru to establish a customs union?
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Andean Pact
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Which of the following is true of the Andean Pact of 1969?
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Political and economic problems seem to have hindered cooperation among member countries
of the Andean Pact.
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Which of the following is true of the Andean Pact during the mid-1980s?
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The Pact had failed to achieve the objective of a common external tariff
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The Andean Community now operates as a(n):
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customs union
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Which of the following refers to a pact that originated in 1988 to establish a free trade area now including Argentina, Brazil, Paraguay, and Uruguay?
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Mercosur
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Which of the following is a reason why Mercosur was temporarily suspended in 2001?
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An economic crisis in Argentina
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Which of the following refers to a trade pact among Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, which began in the early 1960s but collapsed in 1969 due to war?
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Central American Common Market
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Which of the following led to the collapse of the Central American Common Market in 1969?
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War between Honduras and El Salvador after a riot at a soccer match between teams from
the two countries
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which of the following is the aim of the Central America Free Trade Agreement?
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Lowering of trade barriers between the United States and the Central American Common
Market countries
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Which of the following refers to an association of English-speaking Caribbean states that are attempting to establish a customs union?
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CARICOM
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Which of the following is a major obstacle to the establishment of the Free Trade Area of the Americas?
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The United States wants its southern neighbors to agree to tougher enforcement of intellectual property rights, which they do not want to embrace
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Which of the following refers to an attempt to establish a free trade area between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam?
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Association of Southeast Asian Nations
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Which of the following is true of the Asia-Pacific Economic Cooperation (APEC)?
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It was founded in 1990 at the suggestion of Australia
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Which of the following is true with regard to the Asia-Pacific Economic Cooperation (APEC)?
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The stated aim of APEC is to increase multilateral cooperation in view of the economic rise of
the Pacific nations
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Which of the following is a threat facing the emergence of single markets?
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Increased price competition throughout the European Union
