BUSA 3000 Chapter 9 – Flashcards
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REGIONAL INTEGRATION AND ECONOMIC BLOCS 1. National economic integration refers to the economic interdependence experienced by closely associated countries that have formed an alliance.
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False p. 228
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2. The European Union, formerly the European Economic Community, is the world's oldest, largest, and most advanced economic bloc.
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True p. 229
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TYPES OF REGIONAL INTEGRATION 3. Countries in free trade areas only import and export products and services within the regional economic bloc.
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False p. 229
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4. An exporter from Canada would face the same tariff if importing into either Argentina or Brazil.
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True p. 229
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5. In economic unions, member countries often adopt standardized tax rates and exchange rates.
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True p. 230
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LEADING ECONOMIC BLOCS 6. Belgium, France, Germany, Italy, and Spain signed the Treaty of Rome in 1957, which eventually led to the establishment of the EU.
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False p.
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7. The introduction of the euro in 2002 meant that the monetary power of national governments within the EU was taken over by the European Central Bank.
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True p.234 - p.235
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8. Western European members of the EU are expanding their economies at a rate twice as fast as Eastern European members due to the collapse of communism.
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False p. 236
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WHY COUNTRIES PURSUE REGIONAL INTEGRATION 9. Regional integration enables firms to efficiently utilize labor and resources, which ultimately leads to competitive product pricing
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True. p
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10. Foreign firms typically prefer investing in nations that are not part of economic blocs because of the additional regulations and restrictions.
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False
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SUCCESS FACTORS FOR REGIONAL INTEGRATION 11. The most notable characteristic of economic blocs is that the member countries generally share a similar language and culture.
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False. Economic Similarity p. 242
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12. Canadian companies enjoy more trade and investment relationships with U. S. firms than with Mexican firms because of language barriers between Canada and Mexico.
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True. p. 243
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DRAWBACKS AND ETHICAL DILEMMAS OF REGIONAL INTEGRATION 13. The term trade creation refers to trade generated between nations of different economic blocs.
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False. Means Trade is generated among the countries inside the economic bloc because, as barriers fall, each member country tends to begin trading more with members than with nonmembers. p.243
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14. Countries which join economic blocs must sacrifice control of their own economic destiny by submitting to the laws and regulations of the bloc's central authority.
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True p.
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15. Rationalization after regional integration reduces redundancy in a firm by lowering costs and improving the efficiency of company operations.
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True
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REGIONAL INTEGRATION AND ECONOMIC BLOCS 16. The intended purpose of regional integration is to ________. a. increase the mobility of workers among the member countries in a bloc b. reduce trade and investment barriers within the bloc c. streamline customs agency regulations within the bloc d. encourage foreign investment into the bloc
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b. reduce trade and investment barriers within the bloc p.
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17. Which of the following terms is used to refer to two or more geographically connected nations in pursuit of freer trade relations? a. trade organization b. economic union c. economic bloc d. free trade agreement
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c. economic bloc
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18. Which of the following organizations exemplifies regional integration?
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a. EU
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19. Which of the following is favored by the World Trade Organization?
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d. multilateral trading system
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TYPES OF REGIONAL INTEGRATION 20. The common market is categorized as which of the following levels of regional integration? a. free trade area b. free trade area and common external tariffs c. free trade area, common external tariffs and free movement of production factors d. free trade area, common external tariffs, free movement of production factors, and unified fiscal and monetary policies
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c. free trade area, common external tariffs and free movement of production factors
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21. Members of ________ agree to the tariffs and non-tariff barriers that are applied to imports from nonmember countries. a. free trade areas b. customs unions c. economic blocs d. regional alliances
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b. customs unions
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22. All of the following nations are members of MERCOSUR except ________. a. Paraguay b. Uruguay c. Mexico d. Argentina
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c. Mexico
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23. Which of the following is the way in which common markets differ from customs unions? a. Products, services, and factors of production are allowed to move freely between member countries. b. Tariffs and non-tariff trade barriers are eliminated when trade and business investments occur between member nations. c. Member nations share a regulated system of tariff rates and equally distribute tax revenue received from non-member countries. d. The monetary, tax, and fiscal policies of member nations are overseen by a central authority.
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a. Products, services, and factors of production are allowed to move freely between member countries.
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24. A firm's freedom to transfer funds to subsidiaries within a bloc characterizes which of the following levels of regional integration? a. customs union b. common market c. free trade area d. all of the above
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b. common market
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25. At least some EU countries have established all of the following levels of regional integration except ________.
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d. political union
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26. Economic unions are characterized by all of the following except ________. a. reduced border controls b. consistent labeling standards c. shared government institutions d. standardized merger laws
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c. shared government institutions
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LEADING ECONOMIC BLOCS 27. Switzerland is a member of which of the following economic blocs? a. EU b. EFTA c. CAN d. APEC
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b. EFTA
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28. Which of the following has the longest experience with regional integration? a. the Americas b. Asia c. Europe d. the Middle East
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c. Europe
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29. Which of the following is responsible for determining the admission of new member countries to the EU? a. Council of the European Union b. European Parliament c. European Court of Justice d. European Commission
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a. Council of the European Union
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30. The two EU institutions that oversee banking and legal issues are based in which of the following cities? a. Brussels b. Strasbourg c. London d. Luxembourg
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d. Luxembourg
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31. Which of the following industries has experienced rapid expansion in Eastern Europe?
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c. automobile
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32. What is the most likely reason that some Western European countries are concerned about the addition of Eastern European countries to the EU? a. fear of draining EU funds and outgrowing the current infrastructure b. concern about losing employment opportunities and foreign investment c. lack of public roads and transportation systems needed for manufacturing d. inability to provide necessary training and education to poor nations
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b. concern about losing employment opportunities and foreign investment
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33. Countries such as Poland and Hungary have most likely attracted business investment because of ________. a. low wages b. uncomplicated business regulations c. inexpensive land d. few restrictions
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a. low wages
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34. Which of the following has occurred as a result of NAFTA? a. Workers at maquiladoras have instigated union strikes. b. Working conditions in member nations have improved. c. Canadian exports to Europe and Asia have doubled. d. Foreign investors have been replaced by U.S. firms.
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b. Working conditions in member nations have improved.
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35. Associate members of MERCOSUR enjoy which of the following benefits? a. legal waivers b. low cost labor c. preferential trade d. tariff exemption
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c. preferential trade
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36. Which of the following economic blocs will most likely merge with MERCOSUR? a. CER b. NAFTA c. CARICOM d. CAN
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d. CAN
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37. Which of the following members of ASEAN trades more products than it manufactures? a. Singapore b. Malaysia c. Philippines d. Indonesia
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a. Singapore
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38. Which of the following is the primary reason for the lack of success seen by APEC? a. lack of strong industrial nations b. disagreement on economic issues c. language and cultural differences d. insufficient geographical proximity
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b. disagreement on economic issues
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39. Member nations of CER seek to reduce trade dependence on which of the following countries? a. Australia b. Asia c. United States d. Great Britain
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d. Great Britain
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40. All of the following most likely explain the lack of success by economic blocs in Africa except ________. a. tariff restrictions b. political unrest c. infectious diseases d. corruption
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a. tariff restrictions
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WHY COUNTRIES PURSUE REGIONAL INTEGRATION 41. All of the following characterize benefits of regional integration to firms except ________. a. free-trade access within an economic bloc b. widened access to other economic blocs c. increased efficiency in production and marketing d. expanded marketplace for goods and services
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b. widened access to other economic blocs
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42. One of the reasons for the establishment of the European Community was to ________. a. broaden the power of communism within East Germany b. create fair standards of trade and international business c. combine forces against the powerful former Soviet Union d. establish judicial procedures to handle trade violators
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c. combine forces against the powerful former Soviet Union
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SUCCESS FACTORS FOR REGIONAL INTEGRATION 43. The success of which of the following blocs was most dependent on a shared language and culture? a. NAFTA b. MERCOSUR c. EU d. EFTA
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b. MERCOSUR
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44. Which of the following factors has affected Sweden's success in the EU? a. high unemployment b. infrastructure c. cultural issues d. tax policies
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d. tax policies
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DRAWBACKS AND ETHICAL DILEMMAS OF REGIONAL INTEGRATION 45. Which of the following terms is used to refer to a nation in an economic bloc ceasing to trade with a non-member nation? a. trade diversion b. trade creation c. trade autonomy d. free trade
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a. trade diversion
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46. Canada restricts U.S. film and television producers from investing in the Canadian film market in order to ________. a. protect the Canadian film culture b. safeguard the Canadian economy c. ensure national film autonomy d. guard the integrity of Canadian actors
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a. protect the Canadian film culture
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47. Regional integration often forces firms to restructure which may lead to ________. a. trade diversion b. trade creation c. reduced global trade d. worker layoffs
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d. worker layoffs
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48. Firms often internationalize within an economic bloc for all of the following reasons except ________. a. gain international experience b. generate new sales and profits c. reduce exposure to competition d. increase source of supplies
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c. reduce exposure to competition
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49. Many European firms gain access to the NAFTA bloc by ________. a. exporting their manufactured goods into Canada b. investing in the creation of Mexican factories c. advertising and marketing through U.S. media d. establishing political connections through U.S. firms
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b. investing in the creation of Mexican factories
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50. Airbus Industries, the aircraft manufacturer, exemplifies which of the following opportunities created by regional integration? a. joint venture b. collaborative venture c. free trade agreement d. intercontinental bloc
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b. collaborative venture
