Denise International Busine chap 8 PDF

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International Business: The Challenges of Globalization, 7e (Wild) Chapter 8 Regional Economic Integration 1) Trade agreements allow competitors from other nations to enter the domestic market. Answer: TRUE Skill: Concept Objective: 1 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 2) A group of nations in a geographic region undergoing economic integration is called a regional trading bloc. Answer: TRUE Skill: Concept Objective: 1 Difficulty: Easy Course LO: Define the fundamental concepts of international business 3) A common market area is the greatest extent of national integration. Answer: FALSE Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 4) In a free trade area, each country can maintain whatever policy it sees fit against nonmember countries. Answer: TRUE Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 5) Countries belonging to a free trade area must concede a certain amount of their national autonomy to the supranational union of which they are a part. Answer: FALSE AACSB: Dynamics of the global economy Skill: Concept Objective: 1 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration

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6) A common market requires that member nations create a common currency. Answer: FALSE Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 7) A political union makes it mandatory for nations to accept a common stance on all economic and political policies within their territories. Answer: FALSE Skill: Concept Objective: 1 Difficulty: Moderate Course LO: Define the fundamental concepts of international business 8) Canada and the United States are early examples of political unions. Answer: TRUE Skill: Concept Objective: 1 Difficulty: Easy Course LO: Define the fundamental concepts of international business 9) The increase in the level of trade between nations that results from regional economic integration is called trade creation. Answer: TRUE AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 10) A result of trade creation is that buyers pay higher prices for imported goods and services after trade barriers are removed. Answer: FALSE AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 11) The greatest benefit of regional integration is trade diversion. Answer: FALSE Skill: Concept Objective: 2 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 2 Copyright © 2014 Pearson Education, Inc.

12) Economic integration can unintentionally reward a less efficient producer within a trading bloc. Answer: TRUE AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 13) When trade diversion occurs, buyers will likely pay less for products. Answer: FALSE Skill: Concept Objective: 2 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 14) In regional economic integration, industries that require mostly unskilled labor tend to shift production to low-wage nations within a trading bloc. Answer: TRUE AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 15) A benefit of regional economic integration is that it always expands employment opportunities in all nations. Answer: FALSE AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 16) The least amount of sovereignty that must be surrendered to a trading block occurs in a political union. Answer: FALSE AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration

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17) The Single European Act predominantly aimed at establishing common transportation policies among the European Union members. Answer: FALSE Skill: Concept Objective: 3 Difficulty: Moderate Course LO: Define the fundamental concepts of international business 18) The Maastricht Treaty called for political union of the member nations. Answer: TRUE Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 19) Ombudsman and Data Protection Supervisor are the EU institutions that fulfill secondary and support roles. Answer: TRUE AACSB: Dynamics of the global economy Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 20) The Council of the European Union is the executive body of the EU. Answer: FALSE Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 21) The Court of Justice is the court of appeals of the European Union. Answer: TRUE Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 22) Like the European Union commissioners, EU justices are required to act in the interest of their native countries. Answer: FALSE Skill: Concept Objective: 3 Difficulty: Moderate Course LO: Define the fundamental concepts of international business

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23) The European Free Trade Association focuses on trade in consumer goods. Answer: FALSE Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 24) The European Union (EU) and European Free Trade Association (EFTA) created the European Economic Area (EEA). Answer: TRUE Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 25) The North American Free Trade Agreement membership includes Canada, Mexico, and the United States. Answer: TRUE Skill: Concept Objective: 4 Difficulty: Easy Course LO: Define the fundamental concepts of international business 26) The Southern Common Market is also referred to as MERCOSUR. Answer: TRUE Skill: Concept Objective: 4 Difficulty: Easy Course LO: Define the fundamental concepts of international business 27) Today, the Southern Common Market acts as a political union. Answer: FALSE Skill: Concept Objective: 4 Difficulty: Easy Course LO: Define the fundamental concepts of international business 28) The main difficulty CARICOM will continue to face is that most members trade more with nonmembers than they do with each other. Answer: TRUE Skill: Concept Objective: 4 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration

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29) The stated aim of Asia Pacific Economic Cooperation (APEC) is to strengthen the multilateral trading system. Answer: TRUE Skill: Concept Objective: 5 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 30) The primary purpose of the Gulf Cooperation Council (GCC) at its formation was to create a political union between Iraq and Iran. Answer: FALSE AACSB: Dynamics of the global economy Skill: Concept Objective: 6 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 31) 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 ________. A) regional economic integration B) protectionism C) mercantilism D) economic nationalism Answer: A Skill: Concept Objective: 1 Difficulty: Easy Course LO: Define the fundamental concepts of international business 32) Regional economic integration is also referred to as ________. A) mercantilism B) nationalism C) protectionism D) regionalism Answer: D Skill: Concept Objective: 1 Difficulty: Easy Course LO: Define the fundamental concepts of international business

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33) A group of nations in a geographic area undergoing economic integration is called a ________. A) born global firm B) maquiladora C) regional trading bloc D) Eurocurrency market Answer: C Skill: Concept Objective: 1 Difficulty: Easy Course LO: Define the fundamental concepts of international business 34) Which of the following is an important goal of regional economic integration? A) to increase the selling prices of products B) to raise the living standards of people C) to limit the choice of products available to customers D) to establish a socialist government Answer: B AACSB: Dynamics of the global economy Skill: Concept Objective: 1 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 35) Which of the following is the lowest extent of regional economic integration? A) free trade area B) political union C) common market D) customs union Answer: A AACSB: Dynamics of the global economy Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 36) Which of the following is the greatest extent of regional economic integration? A) free trade area B) political union C) common market D) customs union Answer: B AACSB: Dynamics of the global economy Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 7 Copyright © 2014 Pearson Education, Inc.

37) Economic integration whereby countries remove all barriers to trade among themselves, but each country determines its own barriers against nonmembers, is called a(n) ________. A) economic union B) customs union C) common market D) free trade area Answer: D AACSB: Dynamics of the global economy Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 38) Countries belonging to a ________ maintain whatever policies they see fit against nonmember countries. A) economic union B) customs union C) common market D) free trade area Answer: D Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 39) Economic integration whereby countries remove all barriers to trade among themselves, but set a common trade policy against nonmembers is called a(n) ________. A) preferential trade area B) customs union C) economic nationalism D) free trade area Answer: B Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration

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40) The main difference between a free trade area and a customs union is that the members of a customs union ________. A) agree to the free movement of all factors of production B) harmonize their tax, monetary, and fiscal policies and create a common currency C) agree to treat trade with all nonmember nations in a similar manner D) accept a common stance on economic and political policies regarding nonmember nations Answer: C AACSB: Dynamics of the global economy Skill: Concept Objective: 1 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 41) Economic integration whereby countries remove all barriers to trade and the movement of labor and capital between themselves and set a common trade policy against nonmembers is called a ________. A) free trade area B) customs union C) common market D) preferential trade area Answer: C Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 42) Economic integration whereby countries remove barriers to trade and the movement of labor and capital among members, set a common trade policy against nonmembers, and coordinate their economic policies is called a(n) ________. A) customs union B) common market C) economic union D) free trade area Answer: C Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration

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43) A(n) ________ requires member nations to harmonize their tax, monetary, and fiscal policies and create a common currency. A) customs union B) economic union C) free trade area D) common market Answer: B AACSB: Dynamics of the global economy Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 44) ________ require that member countries concede a certain amount of their national autonomy to the supranational union of which they are a part. A) Free trade areas B) Customs unions C) Economic unions D) Preferential trade areas Answer: C AACSB: Dynamics of the global economy Skill: Concept Objective: 1 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 45) Higher levels of trade between nations result in ________. A) higher product prices B) lesser specialization C) greater purchasing power D) trade diversion Answer: C AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration

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46) An increase in the level of trade among nations that results from regional economic integration is called ________. A) trade diversion B) mercantilism C) trade creation D) economic nationalism Answer: C Skill: Concept Objective: 2 Difficulty: Easy Course LO: Define the fundamental concepts of international business 47) Which of the following is a result of trade creation? A) The demand for goods tends to increase. B) Purchasing power of consumers decreases. C) Consumers have a limited choice for selection of goods. D) Imported goods are seldom available at lower prices. Answer: A AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 48) Which of the following is a potential drawback of regional economic integration? A) ethnocentricity B) trade diversion C) economic nationalism D) protectionism Answer: B AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 49) Which of the following is true of trade diversion? A) It increases the purchasing power of consumers. B) It increases the level of trade between nonmember nations. C) It generally increases the prices of products in a nation. D) It guarantees consumers a wider selection of goods. Answer: C AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Moderate Course LO: Discuss arguments for and against regional economic integration 11 Copyright © 2014 Pearson Education, Inc.

50) The least amount of sovereignty that must be surrendered to a trading bloc occurs in a ________. A) economic union B) common market C) free trade area D) political union Answer: C AACSB: Dynamics of the global economy Skill: Concept Objective: 2 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 51) Currently the most sophisticated and advanced example of regional integration is occurring in ________. A) Asia B) Europe C) North America D) Africa Answer: B AACSB: Dynamics of the global economy Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 52) In 1951, Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands signed the Treaty of Paris and created the ________. A) European Union B) European Economic Community C) European Coal and Steel Community D) European Community Answer: C Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business

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53) 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? A) the Treaty of Rome B) the Maastricht Treaty C) the Treaty of Paris D) the Treaty of Versailles Answer: A Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 54) Which of the following materialized the EU's goals of removing trade barriers, increasing harmonization, and enhancing the competitiveness of European companies? A) the Maastricht Treaty B) the European monetary union C) the Single European Act D) the Copenhagen Criteria Answer: C AACSB: Dynamics of the global economy Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 55) The ________ called for banking in a single common currency, setting up of monetary and fiscal targets, and political union of the European Union members. A) Maastricht Treaty B) European monetary union C) Single European Act D) Copenhagen Criteria Answer: A Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business

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56) The European Union plan that established its own central bank and currency in January 1999 is known as the ________. A) Single European Act B) European monetary union C) Copenhagen Criteria D) Southern Common Market Answer: B Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 57) The common currency of the European Union is known as the ________. A) European currency unit B) eurodollar C) euro D) European unit of account Answer: C Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 58) Which of the following is true of the euro? A) It increases exchange-rate risk for business deals between member nations. B) It increases transaction costs. C) It makes prices between markets more transparent. D) It is not accepted among merchants in France, Germany, and Italy. Answer: C AACSB: Dynamics of the global economy Skill: Concept Objective: 3 Difficulty: Moderate Course LO: Define the fundamental concepts of international business 59) Which of the following countries has been facing difficulties in negotiations regarding its application for European Union membership? A) Bulgaria B) Czech Republic C) Romania D) Turkey Answer: D Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 14 Copyright © 2014 Pearson Education, Inc.

60) For countries to become members of the European Union, they have to meet certain demands laid down by the EU referred to as the ________. A) Copenhagen Criteria B) Closer Economic Relations Agreement C) Andean Community D) Euro-Plus Pact Answer: A AACSB: Dynamics of the global economy Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 61) Which of the following institutions is least likely to play an important role in monitoring and enforcing economic and political integration in the European Union? A) European Parliament B) Council of the European Union C) European Court of Human Rights D) European Commission Answer: C Skill: Concept Objective: 3 Difficulty: Easy Course LO: Define the fundamental concepts of international business 62) The main purpose of the ________ is to debate and amend legislation proposed by the European Commission of the EU. A) European Parliament B) Council of the European Union C) Court of Auditors D) Court of Justice Answer: A Skill: Concept Objective: 3 Difficulty: Easy Course LO: Discuss arguments for and against regional economic integration 63) The Council of the European Union is the ________ body o...