3) The “Four Freedoms” are an important goal of the
A) Treaty of Rome.
B) Single European Act.
C) European Monetary System.
D) Maastricht Treaty.
4) The “Four Freedoms” do NOT include the right to
A) vote in local elections.
B) migrate within the EU.
C) write insurance policies throughout the EU.
D) open bank accounts anywhere in the EU.
5) After implementation of the Single European Act, value added taxes in the EU were
A) completely harmonized.
B) unchanged.
C) partially harmonized with minimum and maximum permissible values set by the EU.
D) cut in half in order to increase the role of corporate taxes.
6) The Delors Report
A) created the single currency.
B) added new countries to the EU.
C) created a timetable and steps to economic union.
D) eliminate the ERM.
7) Gains from the Single European Act were expected to be from
A) reduction of transactions costs from having a single currency.
B) reduced trade barriers and customs problems.
C) increased competition and economies of scale.
D) harmonization of environmental and labor standards.
8) All the countries of the EU participate in the Schengen Agreement.
9) When did the European Union become a common market?
10) Which agreement removes customs and passport controls at the common borders of many
EU countries?
11) How did the Single European Act create economic gains in the EU?
12) Explain the major problems that occurred with the implementation of the SMP.
14.6 The Third Wave of Deepening: The Maastricht Treaty
1) The single currency project in the EU will be most successful if European labor is relatively
A) immobile.
B) immobile and business cycles are not synchronized.
C) mobile and business cycles are synchronized.
D) mobile and business cycles are not synchronized.
2) One drawback to a single currency is that
A) the exchange rate is more volatile.
B) bond markets are larger and therefore harder to control.
C) exporters and importers have fewer choices about how they will receive and make payments.
D) individual nations cannot use monetary policy to stabilize the economy.
3) As Europe explored monetary union, evidence to date suggests that increased variability in
exchange rates
A) reduces foreign trade and investment.
B) increases foreign trade and investment.
C) does not seem to have an impact on foreign trade and investment.
D) hurts foreign investment but not trade.
4) The European Union became an economic union with the implementation of which treaty?
A) Treaty of Rome
B) Single Europe Treaty
C) Treaty on European Union
D) Schengen Agreement
5) One of the most controversial features of the Maastricht Treaty is
A) the lack of ability of individual countries to set their own monetary policies.
B) increased control of health and safety measures by the European Commission.
C) the free movement of labor throughout Europe.
D) the elimination of passport controls in parts of Europe.
6) Each of the 15 members of the European Union that joined before May, 2004 use the euro as
their currency.
7) Other nations had tried economic union in the past, and since adopting a common currency
had shown economic benefits for them, the nations of Europe decided to try it too.
8) Adopting the Single European Act had broad popular support; the Treaty on European Union
was more controversial.
9) The Single European Act was expected to create economic benefits by reducing the costs and
risks of currency market transactions.
10) The Maastricht Treaty eliminated passport controls at borders with the European Union.
11) Which EU institution has played a significant role is responding to the economic crisis that
began in 2007?
12) Describe the history and consequent deepening as the European Union developed. Which
treaties created which level of economic integration? Do countries have the ability to participate
in some levels of integration and not others? Give specific examples.
13) Explain the theories as to why the single currency was implemented quickly.
14) Explain the costs and benefits of a single currency.
1) The first and biggest problem the EU faces in its expansion to the east is
A) the reform of its agricultural subsidy programs.
B) the lack of democracy in the countries that are most likely to become members.
C) the unwillingness of the new members to adopt EU rules.
D) the lack of market economies in the countries that are most likely to become members.
2) The European Union membership criteria includes all of the following EXCEPT
A) the country must participate in free trade with all of its goods and services.
B) the country must follow market-based economics.
C) the country must formally adopt the EU-wide rules such as technical standards, environmental
inspections, banking supervision, etc.
D) the country must be a stable functioning democracy.
3) Which of the following is NOT one of the major problems with expanding the EU?
A) Expansion has become a more difficult task because of the unwillingness of the eastern and
central European countries to change.
B) The programs that target EU expenditures could be stretched thin by the addition of countries
with much lower incomes.
C) The EU may be faced with an unstable eastern border with huge worker migratory flows if
the transition economies fail.
D) Most central and eastern European countries have large agricultural sectors and extending
subsidies to these countries would entail an enormous flow of funds given the Common
Agricultural Policy.
4) The fact that 10 additional nations joined the European Union in May 2004 is an example of
deepening.
5) There is no possibility of further widening of the European Union.
6) Emigration is when people leave a country because of supply push factors.
7) Describe the criteria for membership in the European Union. Given the criteria, what are some
of the major challenges with expanding the EU eastward? What are the potential problems of
Turkey joining the EU?
1) As populations age, public spending tends to increase.
2) According to the text, what is the major long-run issue facing the European Union?
3) What challenges does the European Union face in the short, medium, and long run?