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54) What was the main objection raised by those in the United States and Canada who
opposed the ratification of the NAFTA?
A) job losses
B) balance-of-payment problems
C) threat of competition from Asian companies
D) threat of a loss of national sovereignty
55) In 1990, Bolivia, Peru, Ecuador, Colombia, and Venezuela relaunched
A) Mercosur.
B) NAFTA.
C) APEC.
D) the Andean Pact.
56) Mercosur originated as _____ between Brazil and Argentina in 1988.
A) a common market
B) a free trade pact
C) a customs union
D) an economic union
57) According to Alexander Yeats
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A) the trade diversion effects of Mercosur outweigh its trade creation effects.
B) the fastest growing items in intra-Mercosur trade were capital-intensive goods
produced efficiently in the member countries.
C) Mercosur countries will be able to compete globally once the group’s external trade
barriers come down.
D) the customs union is becoming more perfect over time.
58) In early 2006, six CARICOM members and the United States established the _____,
which was modeled on the EU’s single market.
A) Central American Common Market
B) Central America Free Trade Agreement
C) Caribbean Single Market and Economy
D) North American Free Trade Area
59) Which of the following is true of ASEAN?
A) China, India, South Korea, and Singapore are among its members.
B) Collectively, the member states account for about 55 percent of world trade.
C) It is slowly progressing toward establishing a free trade zone.
D) It has been successful in fulfilling its basic objective of fostering freer trade between
member countries.
60) Which of the following is the most frequently aired objection to free trade in Africa?
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A) These economies are too small for free trade to exist.
B) These countries are not ready for a full-fledged political union with a common
currency.
C) The countries need to be “protected” by tariff barriers from unfair foreign
competition.
D) The larger nations such as South Africa and Kenya stand to lose too much from free
trade and competition.
61) The _____ represents the interests of member states and is clearly the ultimate controlling
authority within the EU.
A) European Council
B) European Parliament
C) Court of Justice
D) European Commission
62) Which of the following, adopted by the member nations of the European Community in
1987, committed member countries to work toward the establishment of a single market by
December 31, 1992?
A) Treaty of Rome
B) Single European Act
C) Treaty of Lisbon
D) Maastricht Treaty
63) How has the euro contributed to increasing competition in the European region?
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A) by increasing hedging costs
B) by increasing the cost of capital
C) by making price comparisons easy
D) by enabling a common monetary policy
64) There are two main trading blocs in Europe, the European Union and the
A) Mercosur.
B) Andean Community.
C) European Free Trade Association.
D) European Council.
65) The ultimate controlling unit within the EU is the
A) European Commission.
B) European Parliament.
C) Court of Justice.
D) Council of the European Union.
66) The _____ is primarily a consultative rather than legislative body.
A) European Parliament
B) Court of Justice
C) Council of the European Union
D) European Commission
67) The establishment of the euro required participating countries to
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A) first convert their currency to U.S. dollars, then to euros.
B) give up national control over monetary policy.
C) create national banks at which citizens can convert their existing currency.
D) maintain their own currency in parallel to the euro.
68) Three long-term EU members, Great Britain, _____, and Sweden, have not adopted the
euro.
A) France
B) Italy
C) Denmark
D) Greece
69) On average, studies indicate that NAFTA’s overall impact has been
A) large but negative.
B) large and positive.
C) small and negative.
D) small but positive.
70) According to _____, the trade diversion effects of Mercosur outweigh its trade creation
effects.
A) Alexander Yeats
B) the majority of economists
C) Jacques Delors
D) the World Trade Organization
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71) The most recent attempt to reenergize the free trade movement in Africa occurred in early
2001, when _____, Uganda, and Tanzania, member states of the East African Community
(EAC), committed themselves to relaunching their bloc, 24 years after it collapsed.
A) Sudan
B) Ethiopia
C) Kenya
D) Somalia
72) The United States, Canada, and Mexico are member nations of
A) CAFTA.
B) Mercosur.
C) the Andean Pact.
D) NAFTA.
73) Four main institutions make up the political structure of the EU. Which of them is
responsible for proposing EU legislation, implementing it, and monitoring compliance with EU
laws?
A) European Council
B) Court of Justice
C) European Commission
D) European Parliament
74) Which of the following established the second largest currency zone in the world?
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A) Treaty of Rome
B) Maastricht Treaty
C) Treaty of Lisbon
D) Single European Act
75) The lowering of barriers to trade and investment among countries has led to _____
throughout the EU.
A) higher costs of borrowing
B) increase prices
C) increase in hedging costs
D) increased price competition
76) Once barriers to trade and investment are removed, companies
A) can realize cost economies by centralizing production in key locations regardless of
culture differences.
B) can treat a group of integrated countries like the EU as a single market and produce
standardized products for it.
C) no longer have to deal with competitive practices that formerly limited their ability to
realize cost economies.
D) may still find it difficult to produce a standardized product for a single multiple-
country market due to cultural, economic, administrative and geographic distances.
77) The emerging role of the _____ in competition policy suggests the EU is increasingly
willing and able to intervene and impose conditions on companies proposing mergers and
acquisitions.
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A) European Commission
B) Court of Justice
C) European Council
D) European Parliament
78) Firms outside of trading areas run the risk of being shut out of the single market by the
creation of a
A) “trade fortress.”
B) contracting economy.
C) single-market zone.
D) destabilized economy.
79) Charlyce lives in a country where there are no barriers to the trade of goods and services.
This is called a free trade area/zone.
⊚ true
⊚ false
80) In a customs union, trade barriers are eliminated among member countries, and each
country maintains its own external trade policies.
⊚ true
⊚ false
81) The European Union is an example of an economic union.
⊚ true
⊚ false
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82) Coordination and policy harmonization problems increase as the number of countries that
seek agreement increases.
⊚ true
⊚ false
83) Because of the fact that everyone benefits from economic integration, it is easy to achieve
and sustain.
⊚ true
⊚ false
84) Concerns about national sovereignty in the EU have been a major impediment to
economic integration.
⊚ true
⊚ false
85) A regional free trade agreement will benefit the world only when the amount of trade it
creates exceeds the amount of trade it diverts.
⊚ true
⊚ false
86) The Treaty of Rome, signed in 1957, established the European Free Trade Association.
⊚ true
⊚ false
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87) A central reason for the establishment of the EU was the devastation of Western Europe
during two world wars and the desire for a lasting peace.
⊚ true
⊚ false
88) The Council of the European Union is responsible for proposing EU legislation,
implementing it, and monitoring compliance with EU laws by member states.
⊚ true
⊚ false
89) The judges of the European Court of Justice are required to act as representatives of
national interests, rather than as independent officials.
⊚ true
⊚ false
90) The Single European Act committed EU countries to adopting a common currency by
January 1, 1999.
⊚ true
⊚ false
91) Establishment of the euro created the largest currency zone in the world, replacing the
position the U.S. dollar had held for decades.
⊚ true
⊚ false
92) A key benefit resulting from the adoption of the euro is the ability to compare prices
across member markets.
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⊚ true
⊚ false
93) The implied loss of national sovereignty to the European Central Bank (ECB) underlies
the decision by Great Britain, Denmark, and Sweden to stay out of the euro zone for now.
⊚ true
⊚ false
94) The Andean Pact is a highly successful common market modeled after the EU.
⊚ true
⊚ false
95) Political turmoil and tribalism in several African nations has persistently impeded any
meaningful progress in economic integration.
⊚ true
⊚ false
96) A benefit to companies of economic integration is the opportunity to centralize their
production and reduce costs.
⊚ true
⊚ false
Answer Key
Test name: chapter 9
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