SOM Ch 9

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1. The agreement of the member-states of the A. Central 4. A benefit of adopting the euro as a common A. makes
Central American Common Market joined by American currency is that it: it easier
the Dominican Republic to trade freely with Free Trade to
the United States is known as the: Agreement. compare
A. makes it easier to compare prices across prices
Europe. across
A. Central American Free Trade Agreement. Europe.
B. makes Europe an optimal currency area.
B. Central American Common Market.
C. increases the range of investment options
C. Free Trade Area of the Americas. open only to institutions.

D. CARICOM. D. leads to higher prices, which translate into

substantial gains for European producers.
E. Caribbean Single Market and Economy.
E. decreases competition because it has become
2. The Andean Community now operates as C. customs
harder for consumers to shop around.
a(n): union.
5. The country of Argonia and the country of A. trade
Berylia imposed tariffs on imports from all creation
A. common market. countries. They set up a free trade area,
removing all trade barriers between themselves
B. economic union. but maintaining tariffs on imports from the rest
of the world. Argonia now begins to import
C. customs union. sugar from Berylia. Previously, Argonia was
indigenously producing sugar at a higher cost.
D. command economy. Thus, Argonia benefits from this transaction. This
is known as:
E. political union.
3. An argument against the North American B. mass
A. trade creation
Free Trade Agreement centered on the fear exodus of
that ratification would result in: jobs from the
B. strategic pricing
United States
into Mexico.
C. synergy
A. low interest rates in the Unites States
and Canada.
D. trade diversion
B. mass exodus of jobs from the United
E. protectionism
States into Mexico.
6. Establishment of the euro required participating D. give
C. a move toward a common currency for national governments to: up
NAFTA member nations. control
over
D. competition from the members of the A. have a sound fiscal situation. monetary
European Union. policy.
B. have stable exchange rates.
E. high inflation in the United States and
Canada. C. be democratic in nature.

D. give up control over monetary policy.

E. have a high degree of price stability.

7. Establishment of which of the following would A. A 10. The European Council is D. draft legislation from
hold a coordinating bureaucracy accountable to political considered to be the ultimate the European
the citizens of member nations? union controlling authority within the Commission can become
European Union (EU) because: EU law only if the council
agrees.
A. A political union
A. it monitors member-states to
B. A customs union make sure they are complying
with EU laws.
C. An exclusive economic zone
B. it has a monopoly in
D. A free trade agreement proposing EU legislation.

E. A common market C. it has 754 members that are

directly elected by the
8. The European Community became the A.
populations of the member-
European Union in 1993 following the Maastricht
states.
ratification of the: Treaty.

D. draft legislation from the

European Commission can
A. Maastricht Treaty.
become EU law only if the
council agrees.
B. Warsaw Pact.

E. it is the supreme appeals

C. Treaty of Rome.
court for EU law.
D. Single European Act. 11. A key advantage of adopting C. lowers foreign
the euro is that it: exchange and hedging
E. Lisbon Treaty. costs in Europe.
9. The European Community was established with D. Rome.
A. helps in reduction of
the signing in 1957 of the Treaty of:
competition in Europe.

B. has prevented the

A. Paris.
development of a highly liquid
pan-European capital market.
B. Brussels.

C. lowers foreign exchange and

C. Switzerland.
hedging costs in Europe.
D. Rome.
D. insulates Europe from
international competition.
E. Lisbon.

E. increases the range of

investment options open to
institutions only.
12. The Maastricht Treaty called for: A. establishment of the 14. A regional free trade agreement will B. the
independent European benefit the world only if: amount of
Central Bank (ECB). trade it
A. establishment of the creates
independent European Central A. it raises the standard of living in one of exceeds the
Bank (ECB). the member countries. amount it
diverts.
B. the abolition of restrictions on B. the amount of trade it creates exceeds
cabotage. the amount it diverts.

C. establishment of the C. the currencies of the nations involved

European Parliament. appreciate.

D. the formation of a single D. the balance-of-trade situation remains

market for the European Union. stable in the region.

E. placing restrictions on foreign E. it creates trade surplus for one of the

exchange transactions between countries involved.
member countries.
15. Similarities in the underlying structure of C. optimal
13. Over time the euro will impact C. an increased efficiency economic activity make it feasible to adopt currency
the pan-European capital with which investment a single currency and use a single exchange area.
market by leading to: funds are allocated. rate as an instrument of macroeconomic
policy in a(n):

A. an increase in the cost of

capital. A. managed currency zone.

B. a decline in the overall level B. open exchange regime.

of savings and investment.
C. optimal currency area.
C. an increased efficiency with
which investment funds are D. free trade area.
allocated.
E. advanced monetary zone.
D. reduced liquidity in the
market.

E. reduced competition among

European producers.
16. Suppose the country of Ceria and Lithinia D. trade 18. Where has the movement toward D. Europe
imposed tariffs on imports from all countries, diversion regional economic integration been
and then they set up a free trade area, most successful?
scrapping all trade barriers between themselves
but maintaining tariffs on imports from the rest
of the world. Now, Ceria begins to import sugar A. Africa
from Lithinia. However, Ceria had previously
been importing sugar from another country, B. South America
Cadnia, which produced sugar more cheaply
than Ceria or Lithinia. This is known as: C. North America

D. Europe
A. trade creation
E. Asia
B. strategic pricing
19. Which of the following are significant A. The European
trade blocs in Europe? Union and the
C. synergy
European Free
Trade
D. trade diversion
A. The European Union and the Association
European Free Trade Association
E. protectionism
17. Three countries enter into an agreement to B. B. The European Federation and the
remove all tariffs and trade barriers between Customs European Trade Block
them. They decide on a common trade policy union
with regard to nonmembers. Faced with political C. The European Commission and the
backlash, the countries stop short of allowing COMINTERN
mobility of factors of production such as labor
and capital. Which of the following levels of D. The European Federation and the
economic integration best describes this European Trade Association
arrangement?
E. The European Economic Community
and the European Federation
A. Political union
20. Which of the following are the most D. Free trade
popular form of regional economic agreements
B. Customs union
integration, accounting for almost 90
percent of regional agreements?
C. Common market

D. Economic union
A. Licensing agreements

E. Monetary union
B. Economic unions

C. Common markets

D. Free trade agreements

E. Political unions
21. Which of the following are the two C. Costs and 23. Which of the following countries has adopted B. France
impediments to regional economic national sovereignty the euro as its currency?
integration?

A. Great Britain
A. Labor activism and political
ideologies B. France

B. Immigration and political C. Denmark

ideologies
D. Sweden
C. Costs and national sovereignty
E. Switzerland
D. Political will and popular support
24. Which of the following entails a closer E.
economic integration and cooperation than a Economic
E. Political ideologies and
common market? union
international policies
22. Which of the following comprises the C. The 18 member
euro zone? nations who use the A. Command economy
euro as their
currency B. Customs union
A. The 27 member nations of the
European Union C. Efficient market

B. The member nations of the D. Free trade area

European Union and the applicants
to the union E. Economic union
25. Which of the following has 754 members as of D.
C. The 18 member nations who use
2014, and is directly elected by the European
the euro as their currency
populations of the member-states? Parliament

D. The member nations of the

European Union and countries who
A. Court of Justice
have pegged their currencies to the
euro
B. European Council

E. The 21 member nations that have

C. European Commission
their members in the European
Parliament
D. European Parliament

E. European Community
26. Which of the following has no barriers to C. Common 29. Which of the following is a C. The devastation of
trade between member countries, includes a market factor that resulted in the Western Europe during
common external trade policy, and allows establishment of the European two world wars and the
factors of production to move freely Union (EU)? desire for a lasting peace
between members?

A. The spectacular success of

A. Command economy the North American Free Trade
Agreement (NAFTA)
B. Customs union
B. The trade impasse following
C. Common market the oil crisis in the 1970s that
occurred due to collusion
D. Efficient market among oil producing nations

E. Free trade area C. The devastation of Western

Europe during two world wars
27. Which of the following institutions has a C. European
and the desire for a lasting
monopoly in proposing European Union Commission
peace
legislation?

D. The emergence of Japan as

an economic and industrial
A. Council of the European Union
superpower despite the nuclear
holocaust
B. Court of Justice

E. The rise of communism in

C. European Commission
Europe
D. European Parliament 30. Which of the following is a B. Free movement of
feature of a common market? factors of production
E. European Community between member nations
28. Which of the following is a drawback of A. Loss of
A. Absence of a common
adopting the euro? control over
external trade policy with
national
regard to nonmembers
monetary
A. Loss of control over national monetary policy
B. Free movement of factors of
policy
production between member
nations
B. Increase in the cost of capital

C. Establishment of barriers to
C. Reduction in the liquidity of capital
the free flow of goods between
markets
member nations
D. Reduction of price differentials within the
D. Lack of administrative
euro zone
machinery to oversee trade
relations with nonmembers
E. Loss of investment options open to both
individuals and institutions
E. Mandatory use of a common
currency among member
nations
31. Which of the following is a major B. The need for a united 33. Which of the following is a A. The United States wants
consideration that underlay the Europe to deal with the major obstacle to the its southern neighbors to
establishment of the European United States and the establishment of the Free agree to tougher
Community? politically alien Soviet Trade Area of the Americas? enforcement of intellectual
Union property rights, which they
do not want to embrace.
A. The pressing need to have a A. The United States wants its
common currency that would southern neighbors to agree
make trade between European to tougher enforcement of
and non-European countries intellectual property rights,
easier which they do not want to
embrace.
B. The need for a united Europe
to deal with the United States B. Some constituent nations
and the politically alien Soviet insist on a common currency,
Union an initiative that has not
found support among many
C. The economic lessons from nations.
the Great Depression that hit the
United States in the 1920s C. Brazil and Argentina want
the United States to open up
D. The success of the European critical industries such as
Free Trade Association formed telecom and airlines.
by Western European countries
in 1960 D. The major trading blocks in
the region, NAFTA and
E. The rise of communism in Mercosur, have opposed its
Europe in the 1960s establishment.
32. Which of the following is a major D. Expanding the
E. There is no consensus on
issue confronting the North membership of the
trade policies between Brazil
American Free Trade agreement
and Argentina.
Agreement?

A. Economic stability

B. Reduction in purchasing power

C. Political stability

D. Expanding the membership of

the agreement

E. Lack of resources
34. Which of the following is an D. Great Britain 35. Which of the following is an E. Some U.S. and
example of concerns over national refusing to adopt the expected consequence of the Canadian firms would
sovereignty acting as an common currency of implementation of the North move production to
impediment to regional economic the European Union, American Free Trade Mexico to take advantage
integration? the euro Agreement? of lower labor costs.

A. The Organization of the A. Low-skilled jobs will be

Petroleum Exporting Countries moved out to Mexico resulting
regulating the supply of petroleum in lowering of average wage
as a cartel rates in the United States and
Canada.
B. The Asia-Pacific Economic
Cooperation failing to establish B. Increased imports from
itself as a regional arrangement Mexico will help reduce the
huge trade deficit for United
C. Admission of Eastern European States and Canada.
nations into the European Union
C. Lower incomes of the
D. Great Britain refusing to adopt Mexicans would allow them to
the common currency of the import fewer U.S. and Canadian
European Union, the euro goods, thereby decreasing
demand.
E. The rise of the World Trade
Organization D. A large number of Mexican
firms will hire low-skilled
workers from the United States.

E. Some U.S. and Canadian firms

would move production to
Mexico to take advantage of
lower labor costs.
36. Which of the following is a reason B. The implied loss of 38. Which of the following is a C. It helped create the
for Great Britain, Denmark, and national sovereignty to significant impact of the North background for
Sweden to stay out of the euro the European Central American Free Trade Agreement increased political
zone? Bank (NAFTA)? stability in Mexico.

A. The dollar peg advocated by A. It led to decreased economic

some members of the European stability in Canada.
Union
B. It led to a major trade deficit
B. The implied loss of national for Canada.
sovereignty to the European
Central Bank C. It helped create the
background for increased
C. The volatility of the euro political stability in Mexico.

D. The reluctance to compete D. It led to a trade surplus for all

directly against the U.S. dollar the three member nations.

E. The reluctance to be considered E. It led to a reduction in

an optimal currency area purchasing power of consumers
in America.
37. Which of the following is a reason B. An economic crisis
why Mercosur was temporarily in Argentina 39. Which of the following is a threat B. Increased price
suspended in 2001? facing the emergence of single competition throughout
markets? the European Union

A. The dotcom bust in Paraguay

A. Getting engulfed in a trade
B. An economic crisis in Argentina war

C. The exit of Uruguay from the B. Increased price competition

group throughout the European Union

D. The devaluation of the Mexican C. Increase in price differentials

peso across nations

E. The Venezuelan financial crisis D. Reduced environmental

standards in order to lure
investments

E. Overabundance of greenfield
investments
40. Which of the following is considered to be the C. 43. Which of the following is B. European
ultimate controlling authority within the European responsible for proposing European Commission
European Union? Council Union legislation, implementing it,
and monitoring compliance with
European Union laws by member-
A. Court of Justice states?

B. European Commission
A. Council of the European Union
C. European Council
B. European Commission
D. European Parliament
C. European Parliament
E. European Community
D. Court of Justice
41. Which of the following is defined as a central B.
political apparatus that coordinates the Political
E. European Community
economic, social, and foreign policy of the union
member-states? 44. Which of the following is the aim of A. Lowering of trade
the Central America Free Trade barriers between the
Agreement? United States and the
A. Free trade area Central American
Common Market
B. Political union A. Lowering of trade barriers countries
between the United States and the
C. Economic union Central American Common Market
countries
D. Common market
B. Elimination of trade barriers
E. Command economy between the CARICOM and Central
American Common Market
42. Which of the following is defined as a group of A. Free
countries
countries committed to removing all barriers to trade
the free flow of goods and services between area
C. Reduction of trade barriers
each other, but pursuing independent external
between Caribbean Single Market
trade policies?
and Economy nations and Central
American Common Market
countries
A. Free trade area

D. Introduction of a common
B. Command economy
currency for Costa Rica, El Salvador,
Guatemala, Honduras, and
C. Efficient market
Nicaragua
D. Foreign exchange market
E. Reductions in tariffs and quotas
between Costa Rica, Dominican
E. Location economy
Republic, and Nicaragua
45. Which of the following is the A. A free trade area 47. Which of the following is true A. The European Union's
economic level corresponding about the European competition commissioner
to the least integration? Commission? has been gaining influence
as the chief regulator of
competition policy in the
A. A free trade area A. The European Union's member nations of the
competition commissioner has European Union.
B. A customs union been gaining influence as the
chief regulator of competition
C. A common market policy in the member nations
of the European Union.
D. An economic union
B. The European Commission
E. A political union has to be approved by the
Council of the European
46. Which of the following is the D. To harmonize
Union before it can begin
goal of the Caribbean Single macroeconomic and
work.
Market and Economy? monetary policy between
member-states
C. The European Commission
does not have a policing role
A. To remove all trade barriers
with respect to European
between member nations in
Union laws.
practice

D. The legislation proposed

B. To establish a political union
by the European Commission
goes directly to the European
C. To adopt a common
Parliament.
currency

E. The European Commission

D. To harmonize
is the ultimate controlling
macroeconomic and monetary
authority within the European
policy between member-
Union.
states

E. To establish an economic
union
48. Which of the following is true about B. It is directly elected 49. Which of the following is true D. He pointed out that
the European Parliament? by the populations of of Alexander Yeats's criticism Mercosur countries were
the member-states. of the Andean Pact? insulated from outside
competition by tariffs that
A. It cannot propose amendments run as high as 70 percent
to legislations. A. He pointed out that the of value.
slowest growing items in intra-
B. It is directly elected by the Mercosur trade were cars,
populations of the member-states. buses, agricultural equipment,
and other capital-intensive
C. It is primarily a legislative body goods.
rather than a consultative body.
B. He believed that the trade
D. It does not have the right to veto creation effects of Mercosur
laws such as single-market outweighed its trade diversion
legislation. effects.

E. The European Parliament does C. He felt that Mercosur

not have the right to vote on the countries were prepared to
appointment of commissioners. compete globally once the
group's external trade barriers
came down.

D. He pointed out that

Mercosur countries were
insulated from outside
competition by tariffs that run
as high as 70 percent of value.

E. He felt that capital was

being drawn toward more
efficient enterprises.
50. Which of the following is true D. The Pact had failed to 52. Which of the following is true of the C. It was founded
of the Andean Pact during the achieve the objective of a Asia-Pacific Economic Cooperation in 1990 at the
mid-1980s? common external tariff. (APEC)? suggestion of
Australia.

A. Tariff-free trade existed A. It does not include the United

between member countries. States, Japan, and China.

B. Harmonization of economic B. The meeting of APEC members in

policies between member Seattle in 1993 led to greater
countries had been achieved. economic integration.

C. Successful integration of C. It was founded in 1990 at the

member economies had been suggestion of Australia.
achieved.
D. APEC members signed a free trade
D. The Pact had failed to agreement with China that removes
achieve the objective of a tariffs on 90 percent of traded goods.
common external tariff.
E. APEC members have established a
E. The dominant political free trade zone.
ideology in many of the
53. Which of the following is true of the C. It is the
Andean countries tended
Court of Justice? supreme appeals
toward democracy.
court for European
51. Which of the following is true A. Political and economic Union law.
of the Andean Pact of 1969? problems seem to have A. The judges are required to act as
hindered cooperation representatives of national interests.
among member countries
A. Political and economic of the Andean Pact. B. It comprises several judges from a
problems seem to have few selected countries.
hindered cooperation among
member countries of the C. It is the supreme appeals court for
Andean Pact. European Union law.

B. By the mid-1980s, the D. A member country cannot bring

Andean Pact achieved most of another member country to this court.
its stated objectives.
E. Member countries cannot bring the
C. The dominant political commission or the council to this court.
ideology in many of the
Andean countries tended
toward the democratic end of
the political spectrum.

D. The Galápagos Declaration

effectively replaced the
Andean Pact in 1997.

E. The Andean Pact sought to

remove a common external
tariff.
54. Which of the following is true C. The applicants were 56. Which of the following is true D. It was founded by those
of the criteria to qualify for required to tame inflation. of the European Free Trade western European countries
membership to the European Association (EFTA)? that initially decided not to
Union? be part of the European
Community.
A. The emphasis of EFTA has
A. The applicants were not been on free trade in
required to privatize state agricultural goods.
assets.
B. Industrial goods were left
B. The applicants were not out of the trade arrangement,
required to adopt EU laws. each member being allowed
to determine its own level of
C. The applicants were support.
required to tame inflation.
C. Members cannot determine
D. The applicants were the level of protection
required to refrain from applied to goods coming from
restructuring industries. outside EFTA.

E. The applicants were D. It was founded by those

required to prevent western European countries
deregulation of markets. that initially decided not to be
part of the European
55. Which of the following is true A. Its program includes
Community.
of the East African cooperation on immigration,
Community (EAC)? road and telecommunication
E. It imposes a common tariff,
networks, investment, and
of 5 to 20 percent, on
capital markets.
products imported from
A. Its program includes
outside.
cooperation on immigration,
road and telecommunication
networks, investment, and
capital markets.

B. Its aim is to eliminate

import tariffs among the six
original members.

C. It is the world's largest

free trade area.

D. It seeks to apply national

environmental standards,
provided such standards have
a scientific basis.

E. It seeks to protect
intellectual property rights.
57. Which of the following is true of D. The euro has had a 59. Which of the following is true of D. It seeks the removal of
the euro since its establishment in volatile trading history the provisions of the North most barriers on the
1999? against the U.S. dollar. American Free Trade cross-border flow of
Agreement? services.

A. The value of the euro has been

stable against the U.S. dollar. A. It does not allow financial
institutions unrestricted access
B. The euro's value has steadily to the Mexican market.
appreciated against the U.S.
dollar. B. It abolishes special treatment
(protection) given to Mexican
C. The euro's value initially energy and railway industries.
appreciated and then steadily
depreciated against the U.S. C. It allows lowering of national
dollar. environmental standards to lure
investment.
D. The euro has had a volatile
trading history against the U.S. D. It seeks the removal of most
dollar. barriers on the cross-border
flow of services.
E. The value of the euro has been
constant when compared to the E. It does not deal with the
U.S. dollar. protection of intellectual
property rights.
58. Which of the following is true of D. Countries can
the political case for regional enhance their political
economic integration? weight in the world by
grouping their
economies.
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 who have sought a united

Europe have always had a desire
to make another war in Europe
imminent.
60. Which of the following is true D. It provided the impetus 61. Which of the following is true of C. It created the
of the Single European Act? for the restructuring of the Treaty of Lisbon that was position of the
substantial sections of signed in 2007? president of the
European industry. European Council.
A. It proposed to place
frontier controls among A. It defined the European
European Community Commission's role in competition
countries. policy.

B. It sought to abolish the B. It brought the commission to the

application of the principle of court for failure to act according
"mutual recognition" to to a European Union treaty.
product standards.
C. It created the position of the
C. It proposed to reduce costs president of the European Council.
indirectly by preventing
national suppliers to compete. D. It lifted barriers to competition
in the retail banking and insurance
D. It provided the impetus for businesses.
the restructuring of substantial
sections of European industry. E. It created the Court of Justice,
the supreme appeals court for
E. It proposed to reduce costs European Union law.
directly by preventing lower-
cost suppliers into national
economies.
62. Which of the following is true B. It committed the 64. Which of the following is true with C. It involves the free
of the Treaty of Rome? European Community to regard to an economic union? flow of products and
establish common factors of production
policies in agriculture and among member
A. It obliged all European transportation. A. There are restrictions on countries.
Union members to adopt the immigration, emigration, or cross-
euro. border flow of capital among
member countries.
B. It committed the European
Community to establish B. It entails less economic
common policies in agriculture integration and cooperation than
and transportation. a common market.

C. It called for the C. It involves the free flow of

establishment of internal trade products and factors of
barriers. production among member
countries.
D. It allowed members to
determine the level of D. It is defined as a central
protection applied to goods political apparatus that
coming from outside. coordinates the economic, social,
and foreign policy of the
E. It called for the abolition of a member-states.
common external tariff.
E. It does not adopt a common
63. Which of the following is true B. Each member country
external trade policy.
with regard to a free trade is allowed to determine
area? its own trade policies with
regard to nonmembers.

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.
65. Which of the following is true with C. Regional 66. Which of the following is true with A. The stated aim of
regard to regional economic economic regard to the Asia-Pacific APEC is to increase
integration? integration is good Economic Cooperation (APEC)? multilateral
for consumers cooperation in view of
because it lowers the economic rise of
A. Agreements designed to promote prices. A. The stated aim of APEC is to the Pacific nations.
freer trade within regions have failed increase multilateral cooperation
to produce gains from trade for all in view of the economic rise of
member countries. the Pacific nations.

B. World Trade Organization B. The goal of APEC is to reduce

members are not required to notify import tariffs among the six
the organization of any regional original members to zero.
trade agreements in which they
participate. C. APEC is the world's largest free
trade area.
C. Regional economic integration is
good for consumers because it D. Collectively, the member-
lowers prices. states account for about 85
percent of the world's GNP, 75
D. Regional economic integration percent of world trade, and much
benefits producers because they do of the growth in the world
not have to adapt to a more economy.
competitive environment.
E. APEC currently has 25
E. The movement toward regional member-states, including such
economic integration has been most economic powerhouses as
successful in Asia. Germany, India, and Brazil.
67. Which of the following led to the C. War between
collapse of the Central American Honduras and El
Common Market in 1969? Salvador after a riot at
a soccer match
between teams from
A. Devaluation of the Brazilian the two countries
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. Withdrawal from the trade

arrangement by Costa Rica

E. Collapse of monetary policy

between Costa Rica and El
Salvador
68. Which of the following levels of economic D. 71. Which of the following occurs when lower- D. Trade
integration involves the use of a common Economic cost external suppliers are replaced by diversion
currency, harmonization of members' tax rates, union higher-cost suppliers within a free trade
and a common monetary and fiscal policy? area?

A. Free trade area A. Trade creation

B. Customs union B. Strategic pricing

C. Common market C. Synergy

D. Economic union D. Trade diversion

E. Command economy E. Protectionism

69. Which of the following meets in Strasbourg, A. 72. Which of the following proposed that all A. Delors
France, is primarily a consultative rather than a European impediments to the formation of a single Commission
legislative body, and debates legislation Parliament market be eliminated by December 31, 1992,
proposed by the commission and forwarded to resulting in the Single European Act?
it by the council?

A. Delors Commission
A. European Parliament
B. Andean Pact
B. European Central Bank
C. Treaty of Rome
C. Court of Justice
D. North American Free Trade Agreement
D. European Free Trade Association
E. Maastricht Treaty
E. European Community
73. Which of the following refers to a 1969 A. Andean
70. Which of the following occurs when high-cost C. Trade agreement among Bolivia, Chile, Ecuador, Pact
domestic producers are replaced by low-cost creation Colombia, and Peru to establish a customs
producers within a free trade area? union?

A. Value creation A. Andean Pact

B. Strategic pricing B. ASEAN

C. Trade creation C. Mercosur

D. Trade diversion D. CARICOM

E. Economic exposure E. Caribbean Single Market and Economy

74. Which of the following refers to agreements A. Regional 77. Which of the following refers to a pact that C.
among countries in a geographic region to economic originated in 1988 to establish a free trade Mercosur
reduce and ultimately remove tariff and integration area now including Argentina, Brazil,
nontariff barriers to the free flow of goods, Paraguay, and Uruguay?
services, and factors of production between
each other?
A. ASEAN

A. Regional economic integration B. NAFTA

B. Cross-cultural integration C. Mercosur

C. Zoning agreement D. CARICOM

D. Administrative trade policies E. CAFTA

78. Which of the following refers to a permanent D.
E. Balance-of-trade equilibrium
bailout fund, worth about €500 billion, set up European
75. Which of the following refers to an A. by the euro zone nations to restore Stability
association of English-speaking Caribbean CARICOM confidence in the euro? Mechanism
states that are attempting to establish a
customs union?
A. European Fiscal Union

A. CARICOM B. European Fiscal Compact

B. Central American Free Trade Agreement C. Troubled Assets Relief Program

C. Central American Common Market D. European Stability Mechanism

D. Free Trade Area of the Americas E. European Financial Stability Facility

79. Which of the following refers to a trade pact A. Central
E. Caribbean Single Market and Economy
among Costa Rica, El Salvador, Guatemala, American
76. Which of the following refers to an attempt D. Honduras, and Nicaragua, which began in the Common
to establish a free trade area between Brunei, Association early 1960s but collapsed in 1969 due to war? Market
Cambodia, Indonesia, Laos, Malaysia, of
Myanmar, Philippines, Singapore, Thailand, and Southeast
Vietnam? Asian A. Central American Common Market
Nations
B. Free Trade Area of the Americas
A. Asia-Pacific Economic Cooperation
C. Caribbean Single Market and Economy
B. South Asian Association for Regional
Cooperation D. Mercosur

C. Asian Clearing Union E. CARICOM

D. Association of Southeast Asian Nations

E. Maastricht Treaty
80. Which of the following supports C. Coordination and 82. Which of the following was a D. Apply the principle of
the economic case for regional policy harmonization change proposed by the Single "mutual recognition" to
economic integration? problems are largely a European Act? product standards
function of the number of
countries that seek
A. International institutions such agreement. A. Establish frontier controls
as the World Trade Organization among European Community
have been moving the world countries
away from a free trade regime.
B. Increase the resources
B. The greater the number of required for complying with
countries involved in a free trade bureaucracy
trade agreement, the fewer the
perspectives that must be C. Place barriers to competition
reconciled. in the retail banking and
insurance businesses
C. Coordination and policy
harmonization problems are D. Apply the principle of "mutual
largely a function of the number recognition" to product
of countries that seek standards
agreement.
E. Reduce costs directly by not
D. It is difficult to establish a allowing lower-cost suppliers
free trade and investment into national economies
regime among a limited number
of adjacent countries as
compared to the world
community.

E. Since most governments do

not intervene, unrestricted free
trade and FDI have become a
reality.
81. Which of the following treaties A. The Maastricht Treaty
committed European
Community members to adopt a
common currency by January 1,
1999?

A. The Maastricht Treaty

B. The Treaty of Rome

C. The Treaty of Lisbon

D. The Montreal Treaty

E. The Treaty of Paris