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Exam 9: Regional Economic Integration

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Question 51

Multiple Choice

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Which feature of a customs union differentiates it from a free trade area?

A) Harmonization of members' tax rates
B) A common currency
C) A common external trade policy toward nonmembers
D) Ability of factors of production to move freely between members

E) B) and D)
F) A) and C)

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Question 52

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The Free Trade Area of the Americas that was established in 2005 has thus far proven to be a success.

A) True
B) False

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Question 53

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A political benefit of economic integration is that:

Compare and contrast a free trade area and a common market. Provide examples.

Country A and Country B entered into a free trade agreement recently. After this, Country A starts importing heavy machinery from CountryB. Country A used to previously import such machinery at lower rates from another country. Which of the following has occurred in this scenario?

A key benefit resulting from the adoption of the euro is the ability to compare prices across member markets.

The governments of both Canada and the United States are keen on adding other Latin American countries to NAFTA.

There are two main trading blocs in Europe, the European Union and the European Free Trade Association.

What is the most enduring free trade area in the world?

Regional economic integration involves 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.

In a(n) ____, similarities in the underlying structure of economic activity make it feasible to adopt a single currency and use a single exchange rate as an instrument of macroeconomic policy.

_____ occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area.

The bulk of intra-ASEAN trade consisted of goods whose tariffs had been reduced through an ASEAN preferential trade arrangement.

Describe the disadvantages of economic integration for international businesses. How can firms protect themselves from these threats?

What is the Single European Act? What was the effect of the Single European Act on the EU economy? Did the Single European Act achieve its goals?

Briefly describe the four main institutions that make up the political structure of the EU.

Establishment of the euro created the largest currency zone in the world, replacing the position the U.S. dollar had held for decades.

Which of the following is seen as a benefit of the euro?

From least integrated to most integrated, the levels of economic integration are:

Which of the following occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area?