Chapter 6

Question 1

The process whereby countries in a geographic area cooperate with one another to reduce or eliminate barriers to the international flow of products, people, or capital is called ________.

regional economic integration

protectionism

mercantilism

economic nationalism

Answer 1

regional economic integration

Question 2

The European Union is an example of ________ integration.

regional
relative
global
bilateral

Answer 2

regional

Question 3

Which of the following is an important goal of regional economic integration?

to increase the selling prices of products

to raise the living standards of people

to limit the choice of products available to customers

to establish a socialist government

Answer 3

to raise the living standards of people

Question 4

A(n) ________ eliminates trade barriers among member countries and is the lowest level of regional economic integration.

free trade area
customs union
common market
economic union

Answer 4

free trade area

Question 5

Countries belonging to a ________ maintain whatever policies they see fit against nonmember countries.
economic union customs union common market free trade area

economic union
customs union
common market
free trade area

Answer 5

free trade area

Question 6

A(n) ________ combines the elimination of internal trade barriers among member countries with the adoption of common external trade policies toward nonmembers.

free trade area
customs union
common market
economic union

Answer 6

customs union

Question 7

In a(n) ________, members eliminate internal trade barriers, adopt a common external policy toward nonmembers, and eliminate barriers to the movement of the factors of production.

free trade area
customs union
commons market
economic union

Answer 7

commons market

Question 8

A(n) ________ requires member nations to harmonize their tax, monetary, and fiscal policies and create a common currency.

customs union
economic union
free trade area
common market

Answer 8

economic union

Question 9

Higher levels of trade between nations result in ________.

higher product prices
lesser specialization
greater purchasing power
trade diversion

Answer 9

greater purchasing power

Question 10

Which of the following is a result of trade creation?

The demand for goods tends to increase.
Purchasing power of consumers decreases. Consumers have a limited choice for selection of goods. Imported goods are seldom available at lower prices.

Answer 10

The demand for goods tends to increase.

Question 11

If all countries in a trading bloc are asked to give up the greatest amount of sovereignty, they would most likely be joining a(n) ________.

economic union
free trade area
customs union
political union

Answer 11

political union

Question 12

Currently the most sophisticated and advanced example of regional integration is occurring in ________.

Asia
Europe
North America
Africa

Answer 12

Europe

Question 13

Which of the following treaties was signed by the members of the European Coal and Steel Community in 1957 for creating the European Economic Community?

The Treaty of Rome
the Maastricht Treaty
the Treaty of Paris
the Treaty of Versailles

Answer 13

The Treaty of Rome

Question 14

The ________ called for banking in a single common currency, setting up of monetary and fiscal targets, and political union of the European Union members.

Maastricht Treaty
European Monetary
Union Single European
Act Copenhagen Criteria

Answer 14

Maastricht Treaty

Question 15

The ________ is the common currency of the European Union.

franc
pound
euro
mark

Answer 15

euro

Question 16

Which of the following statements about the euro is true?

It was adopted by all existing EU members when it was first initiated.

It must be adopted by countries as a precondition to joining the EU.

It cannot be used by countries that are not members of the EU.

It was designed to eliminate currency as a barrier to trade in the EU.

Answer 16

It was designed to eliminate currency as a barrier to trade in the EU.

Question 17

The main purpose of the ________ is to debate and amend legislation proposed by the European Commission of the EU.

European Parliament
Council of the European
Union Court of Auditors
Court of Justice

Answer 17

European Parliament

Question 18

The European Commission is the ________ body of the European Union.

executive
legislative
financial
monitoring

Answer 18

executive

Question 19

The Court of Justice is the ________ of the European Union.

court of honor
court of appeals
small-claims court
arbitral tribunal

Answer 19

court of appeals

Question 20

Which of the following is best classified as an economic union?

Southern Common Market (MERCOSUR)
European Union (EU)
North American Free Trade Agreement (NAFTA)
Andean Community

Answer 20

European Union (EU)

Question 21

While ________ encourages free trade among Canada, Mexico and the United States, manufacturers and distributors must abide by local content requirements and rules of origin.

NAFTA
LAFTA
CAN
CAFTA-DR

Answer 21

NAFTA

Question 22

Which of the following statements is true of NAFTA?

It introduced a common currency for trade between the U.S., Mexico and Canada.

It overrode the local content requirements and rules of origin for products manufactured in the member nations.

It eliminated all tariffs and nontariff trade barriers on goods originating from within North America.

It called for stringent rules regarding government procurement practices and the imposition of countervailing duties.

Answer 22

It eliminated all tariffs and nontariff trade barriers on goods originating from within North America.

Question 23

The ________ was established in 2006 between the United States and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and later the Dominican Republic.

NAFTA
LAFTA
CAFTA-DR
CAN

Answer 23

CAFTA-DR

Question 24

The main objectives of the Andean Community include ________.

introduction of tariffs for trade among member countries separate policies in both transportation and certain industries
a common external tariff
a common currency

Answer 24

a common external tariff

Question 25

Today, the Southern Common Market (MERCOSUR) acts as a(n) ________.

economic union
political union
customs union
preferential trading area

Answer 25

customs union

Question 26

The common market between Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua is referred to as the ________.

Latin American Integration Association
Central American Common Market
Andean Community
Southern Common Market

Answer 26

Central American Common Market

Question 27

The Free Trade Area of the Americas (FTAA) is a trade agreement ________.

between Mexico, Canada, and the U.S.
among the South American nations
that has been proposed to create the largest free trade area on the planet that includes the United States and the European Union

Answer 27

that has been proposed to create the largest free trade area on the planet

Question 28

The major objective of the Association of Southeast Asian Nations (ASEAN) is to ________.

approach the European Union to resolve disputes between member countries

safeguard the region’s economic and political stability

introduce barriers to trade and investment

increase members’ tariff rates from an average of 7.5 percent to 15 percent

Answer 28

safeguard the region’s economic and political stability

Question 29

A group of fifty-three nations on the African continent joined forces in 2002 to create the ________.

Economic Community of West African States
African Union
African Unification Front
Organization of the African Unity

Answer 29

African Union