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International Marketing, 18e (Cateora)
Chapter 10 Europe, Africa, and the Middle East
1) Multinational market regions are those groups of countries that seek mutual economic benefit
from reducing interregional trade and tariff barriers.
2) An important objective of the member countries of the United Nations is bringing about
mutual economic development.
3) The WTO primary purpose is making trade more profitable for emerging economies.
4) Nations with complementary economic bases are most likely to encounter frictions in the
development and operation of a common market unit.
5) The importance of political unity to fully achieve all the benefits of economic integration
drove European countries to form the World Trade Organization (WTO).
6) The most basic level of economic integration and cooperation is the geographical local
federation (GLF).
7) At the most general level, the WTO represents the most important and comprehensive trade
agreement in history.
8) A free trade area (FTA) provides its members with a mass market without barriers to impede
the flow of goods and services.
9) A customs union is the most fully integrated form of regional cooperation.
10) The blueprint for the European Union began with the Treaty of Rome in 1957.
11) A commonwealth of nations is an organization providing for the strongest possible economic
integration relationship.
12) The European Union was created when the 12 nations of the European Community ratified
the Maastricht Treaty.
13) The Commonwealth of Independent States (CIS) was formed by Britain because it did not
want to join the European Economic Community (EEC).
14) Historically, standards have been used to effectively increase market access, such as the sale
of German beer in Italy.
15) In line with its goal of enlargement, ten new countries joined the European Union in 2004
followed by Bulgaria and Romania in 2007.
16) The Council of Ministers of the European Union can enact into law all proposals involving
changes in tax rates on products and services by majority vote.
17) The decisions of the European Court of Justice are not final, but can be appealed in national
courts.
18) In the Amsterdam Treaty, the European Union agreed to accommodate the changes brought
about by the monetary union and the admission of new members.
19) All three Baltic states started off with the same legacy of efficient industry and American-
style capitalist economies.
20) Europe and Asia have a trade group that has emerged and persisted since the dissolution of
the Soviet Union called the Commonwealth of Independent States.
21) The Commonwealth of Independent States is a loose economic and political alliance with
open borders but no central government.
22) The first Soviet republics to declare independence were the Baltic states.
23) Economic growth among African countries has been on the downswing for the past several
years.
24) The Southern African Development Community is the most advanced and viable of Africa's
regional organizations.
25) Iran, Pakistan, and Turkey, formerly the Regional Cooperation for Development (RCD),
have renamed their regional group the Economic Cooperation Organization (ECO).
26) The Arab states on the Persian Gulf, Egypt, and Morocco worked out an agreement on an
Arab Free Trade Area, sometimes called the Greater Arab Free Trade Area (GAFTA).
27) The initial aim of a multinational market is to protect businesses that operate within its
borders.
28) With the adoption of the euro, price differentials are much easier to spot, and EU consumers
can search for the best bargains in brand-name products more easily.
29) Groups of countries that seek mutual economic benefit from reducing interregional trade and
tariff barriers are called
A) multilateral economic associations.
B) cartels.
C) multinational market regions.
D) trade associations.
E) political and cultural associations.
30) Multinational market groups form
A) a large organization that promotes harmony by mutual agreement to a common peace treaty.
B) large markets that provide potentially significant opportunities for international business.
C) a conglomerate that seeks to undertake foreign trading ventures as one company.
D) a nonprofit entity that works together to aid the development of underdeveloped countries.
E) regional trading blocs without trade restrictions internally and borders restricted from
outsiders.
31) It was not until this single market was established that the United States, Japan, and other
countries gave serious thought to creating other alliances. What is being referred to here?
A) the European Commission
B) the European Economic Community
C) the Organization for Security and Co-operation in Europe
D) the Asia-Pacific Economic Cooperation
E) the European Community
32) The World Trade Organization is wholly dedicated to
A) expanding capitalism.
B) eliminating language barriers in trade.
C) having free and open national borders.
D) enforcing international anti-bribery laws.
E) improving the efficiency of trade among nations.
33) Every type of economic union shares the development and enlargement of market
opportunities as a basic orientation. What best describes the primary way market opportunities
are enlarged by economic unions?
A) preferential tariff treatment for participating members
B) use of embargos to eliminate rival competition
C) formulation of cartels
D) quest for economic dominance through boycotts of rivals
E) movement toward a common language as a means to overcoming economic hurdles
34) Nations with complementary economic bases are least likely to
A) develop a distinctive monetary system.
B) allow individual differences to be outweighed by the total benefit of economic integration.
C) experience internal economic development.
D) achieve enlargement of market opportunities through preferential tariff treatment.
E) encounter frictions in the development and operation of a common market unit.
35) What is a requisite for the survival of any economic union?
A) avoiding potentially significant opportunities for international business
B) having agreements and mechanisms in place in order to settle economic disputes
C) including into the union countries with diverse economies, distinctive monetary systems,
developed agricultural bases, and different natural resources
D) establishing of a comprehensive agriculture and economic policy
E) ensuring biased treatment of goods produced within the union
36) What is a basic requisite for the development of a supranational market arrangement?
A) political amenability among countries
B) business strategy sharing
C) adoption of common cultural practices
D) protection of the market by exercising tariffs and boycotts
E) a desire to maintain state sovereignty
37) With respect to the political factors that affect supranational markets, ________ is one of the
most cherished possessions of any nation.
A) a two-party system
B) a three-party system
C) state federalism
D) state sovereignty
E) a strong middle class
38) What is one of the multilateral free trade agreements signed by the United States?
A) CETA
B) NAFTA
C) NATO
D) MERCOSUR
E) LAFTA
39) As Timothy examines markets that might match his company's investment requirements, he
is particularly interested in the fact that the European Community has an extensive transportation
network. This network seems to draw all the member nations closer together physically. What
critical factor for ensuring an effective economic union is Timothy most likely examining when
reviewing transportation networks?
A) cultural factors
B) trade factors
C) political factors
D) geographic proximity
E) economic factors
40) Similarity of cultures can make or break an economic union. Although there is great cultural
diversity in the European Union, key members share ________ and are commonly aware of
being European.
A) a common language
B) a long-established Christian heritage
C) a dislike for foreigners
D) a strong affiliation to monarchy and feudalism
E) a democratic background and heritage
41) One of the first factors that gave the European Union an edge over others in the process of
becoming a common market was a
A) similarity in agriculture and monetary policies.
B) similarity in political systems.
C) similarity in languages.
D) well-developed transportation network.
E) common affiliation toward democracy.
42) At the most general level, ________ represents the most important and comprehensive trade
agreement in history.
A) NAFTA
B) the Amsterdam Treaty
C) MERCOSUR
D) the WTO
E) ASEAN
43) The most basic economic integration and cooperation, in which governments agree to
participate jointly to develop basic industries beneficial to each economy, is the
A) political union.
B) common market.
C) regional cooperation for development (RCD).
D) customs union.
E) free trade area (FTA).
44) A ________ is an agreement between two or more countries to reduce or eliminate customs
duties and nontariff trade barriers among partner countries while members maintain individual
tariff schedules for external countries.
A) restricted trade area
B) noncooperation agreement
C) regional cooperation for development
D) tariff pact
E) free trade area
45) A free trade area (FTA) provides its members with
A) complete political integration.
B) a mass market without trade barriers among partner countries.
C) a regional cooperation for social development.
D) a common market that eliminates all external tariffs.
E) a market that offsets higher nontrade barriers with lower external tariff.
46) A ________ has reduced or eliminated internal tariffs and adds a common external tariff on
products imported from countries outside the group.
A) preferential trade area
B) currency union
C) regional cooperation for development
D) customs union
E) free trade area
47) A ________ is an intermediate step in the transition from a free trade area to a common
market.
A) political union
B) currency union
C) regional cooperation for development (RCD)
D) customs union
E) preferential trade area
48) What was a customs union before becoming a common market?
A) NAFTA
B) DR-CAFTA
C) Israel-Mexico Free Trade Agreement
D) the European Union
E) South Asian Free Trade Area
49) A ________ agreement eliminates all tariffs and other restrictions on internal trade, adopts a
set of common external tariffs, and removes all restrictions on the free flow of capital and labor
among member nations.
A) preferential trade agreement
B) common market
C) regional cooperation for development
D) customs union
E) free trade area
