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True False
2. The movement toward regional economic integration been most successful in Asia.
True False
3. In a customs union, trade barriers are eliminated among member countries, and each country
maintains its own external trade polices with nonmember countries.
True False
4. A common market has no barriers to trade between member countries, includes a common
external trade policy, and allows factors of production to move freely between members.
True False
9-1
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McGraw-Hill Education.
5. A common market entails even closer economic integration and cooperation than an
economic union.
True False
True False
7. Coordination and policy harmonization problems are largely a function of the number of
countries that seek agreement.
True False
True False
9. Because of the fact that everyone benefits from economic integration, it is easy to achieve
and sustain.
True False
True False
11. Trade diversion occurs when higher-cost external producers are replaced by lower-cost
external producers within the free trade area.
True False
9-2
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McGraw-Hill Education.
12. In theory, WTO rules should ensure that a free trade agreement results in trade diversion.
True False
13. 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
14. There are two main trading blocs in Europe, the European Union and the European Free
Trade Association.
True False
15. The Treaty of Rome, signed in 1957, established the European Free Trade Association.
True False
16. 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
17. 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
18. The ultimate controlling unit within the EU is the European Council.
True False
9-3
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McGraw-Hill Education.
19. The European Parliament is primarily a consultative rather than legislative body.
True False
20. The judges of the European Court of Justice are required to act as representatives of national
interests, rather than as independent officials.
True False
21. The establishment of the euro required participating countries to give up their monetary
policy.
True False
22. The Single European Act committed EU countries to adopting a common currency by January
1, 1999.
True False
23. 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
24. Great Britain, Sweden, and France have led the push toward adopting the euro.
True False
25. A key benefit resulting from the adoption of the euro is the ability to compare prices across
member markets.
True False
9-4
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McGraw-Hill Education.
26. The implied loss of national sovereignty to the ECB underlies the decision by Great Britain,
Denmark, and Sweden to stay out of the euro zone for now.
True False
27. Since its establishment, the euro has had a stable trading history.
True False
28. On average, studies indicate that NAFTA's overall impact has been small but positive.
True False
29. The governments of both Canada and the United States are keen on adding other Latin
American countries to NAFTA.
True False
30. The Andean Pact is a highly successful common market modeled after the EU.
True False
31. According to Alexander Yeats, the trade diversion effects of Mercosur outweigh its trade
creation effects.
True False
32. The Free Trade Area of the Americas that was established in 2005 has thus far proven to be
a success.
True False
9-5
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33. The bulk of intra-ASEAN trade consisted of goods whose tariffs had been reduced through an
ASEAN preferential trade arrangement.
True False
True False
35. Political turmoil in several African nations has persistently impeded any meaningful progress
in economic integration.
True False
36. The East African Community (EAC) has been a successful integration effort in Africa during
the last three decades.
True False
37. To exploit the opportunities presented by the EU, non-EU firms must establish EU
subsidiaries.
True False
True False
9-6
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39. Once barriers to trade and investment are removed, companies can treat a group of
integrated countries like the EU as a single market and produce standardized products for it.
True False
40. The emerging role of the European Commission in competition policy suggests the EU is
increasingly willing and able to intervene and impose conditions on companies proposing
mergers and acquisitions.
True False
41. From least integrated to most integrated, the levels of economic integration are:
A. a common market, a free trade area, an economic union, a customs union, and a political
union.
B. a free trade area, a customs union, a common market, an economic union, and a political
union.
C. a customs union, a free trade area, a common market, a political union, and an economic
union.
D. a common market, an economic union, a customs union, a free trade area, and a political
union.
9-7
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42. Which level of economic integration eliminates trade barriers between member countries and
adopts a common external trade policy?
A. Political union
B. Customs union
C. Common market
D. Economic union
43. Country X and Country Y reach an agreement to boost bilateral trade. They agree to remove
all barriers to the trade of goods and services. They, however, are free to determine their own
trade policies with regard to nonmembers. Which level of economic integration is this an
example of?
A. A customs union
B. An economic union
C. A common market
44. Which feature of a customs union differentiates it from a free trade area?
B. A common currency
9-8
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45. A _____ has no barriers to trade between member countries, includes a common external
trade policy, and allows factors of production to move freely between members.
A. common market
B. customs union
D. bonded market
46. Three countries agree to remove barriers to trade between member countries and adopt a
common external trade policy toward nonmembers. They also agree to allow people and
other factors of production to move freely across their borders. Which level of economic
integration is this an example of?
A. Bonded market
B. Customs union
D. Common market
B. A common currency
9-9
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48. A(n) _____ involves the free flow of products and factors of production between member
countries, the adoption of a common external trade policy, a common currency,
harmonization of members' tax rates, and a common monetary and fiscal policy.
A. economic union
B. common market
C. customs union
50. Which of the following is a reason why the European Union is considered an imperfect
economic union?
A. Factors of production are not allowed to move freely between member countries.
D. Products and services are not allowed to move freely between member countries.
9-10
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51. The move toward economic union raises the issue of how to make a coordinating
bureaucracy accountable to the citizens of member nations. Which of the following offers a
solution to this problem?
A. A common market
C. A customs union
D. A political union
52. What is the most enduring free trade area in the world?
A. NAFTA
B. EFTA
C. ASEAN
D. Mercosur
53. Why doesn't Great Britain use the euro as its national currency?
9-11
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54. A political benefit of economic integration is that:
C. it allow countries to specialize in the production of goods and services that they can
produce most efficiently.
55. Which of the following explains why economic integration has never been easy to achieve or
sustain, despite the strong economic and political arguments in support?
B. Countries fear a reduction of their political weight in the world because of economic
integration.
C. Linking neighboring economies and making them increasingly dependent on each other
creates little incentives for political cooperation.
D. While a nation as a whole may benefit significantly, certain groups may lose.
56. _____ occurs when high-cost domestic producers are replaced by low-cost producers within
the free trade area.
A. Trade deficit
B. Trade diversion
C. Trade creation
D. Trade distortion
9-12
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57. Which of the following occurs when lower-cost external suppliers are replaced by higher-cost
suppliers within the free trade area?
A. Efficiency gain
B. Trade diversion
C. Trade deficit
D. Trade creation
58. Country A and Country B entered into a free trade agreement recently. After this, Country A
starts importing heavy machinery from Country B. Country A used to previously import such
machinery at lower rates from another country. Which of the following has occurred in this
scenario?
A. Trade creation
B. Efficiency gain
C. Trade deficit
D. Trade diversion
59. To ensure that a free trade agreement does not result in trade diversion, which of the
following has to come within the scope of WTO?
A. Nontariff barriers
B. Services
C. Energy markets
D. Tax rates
9-13
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60. The European Community was established by:
61. The _____ is responsible for proposing EU legislation, implementing it, and monitoring
compliance with EU laws by member states.
A. European Parliament
B. European Commission
D. Court of Justice
62. Why is the European Council said to be the ultimate controlling authority within the EU?
B. Since its role in setting competition policy is becoming increasingly important to business
D. Since draft legislation from the commission can become EU law only if the council agrees
9-14
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63. Which of the following is directly elected by the populations of the member states and is
primarily a consultative rather than legislative body?
64. Which of the following was the outcome of the Treaty of Lisbon signed in 2007?
65. Which of the following observations pertaining to the EU's Court of Justice is incorrect?
D. A member country can bring other members to the court for failing to meet EU treaty
obligations.
D. By adopting it, the EU created the second most widely traded currency in the world.
9-15
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67. Which treaty, signed in December 1991, committed EC members to adopting a common
currency by January 1, 1999?
9-16
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70. In a(n) ____, similarities in the underlying structure of economic activity make it feasible to
adopt a single currency and use a single exchange rate as an instrument of macroeconomic
policy.
D. monetary zone
71. Which of the following was required for new applicants to qualify for EU membership?
C. Deregulation of markets
72. Which of the following is seen to be a consequence of the size of the EU from 15 nations to
27 nations?
9-17
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73. Which of the following is a reason why Turkey is not yet a member of the EU?
A. Because only about 10 percent of Turkey's international trade is with the EU.
C. Because the country has yet to form a customs union with the EU.
74. How does the NAFTA seem to increase the international competitiveness of U.S. and
Canadian firms?
B. It increases tariff barriers making the North American market less attractive to Asian
companies.
D. It gives them production bases in South American markets like Brazil and Argentina.
75. What was the main objection raised by those in the United States and Canada who opposed
the ratification of the NAFTA?
A. Job losses
9-18
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76. Bolivia, Peru, Ecuador, Columbia, and Venezuela are all members of:
A. Mercosur.
B. NAFTA.
C. APEC.
77. Mercosur originated as a(n) _____ between Brazil and Argentina in 1988.
A. common market
C. customs union
D. economic union
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.
9-19
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79. In early 2006, six CARICOM members and the United States established the ____, which was
modeled on the EU's single market.
A. China, India, South Korea, and Singapore are among its members.
B. Collectively, the member states account for about 55 percent of world trade.
D. It has been successful in fulfilling its basic objective of fostering freer trade between
member countries.
9-20
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82. Which of the following accounts for about 55 percent of the world's GNP and 49 percent of
world trade?
A. NAFTA
B. APEC
C. ASEAN
D. EFTA
83. Which of the following is the most frequently aired objection to free trade in Africa?
B. These countries are not ready for a full-fledged political union with a common currency.
D. The larger nations like South Africa and Kenya stand much to lose from free trade and
competition.
84. The lowering of barriers to trade and investment between countries is likely to lead to _____
throughout the EU.
B. increase prices
Essay Questions
9-21
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85. Discuss the trend toward increased regional economic integration.
86. What are the five levels of economic integration? Briefly describe each form.
87. Which is the most enduring free trade area in the world?
9-22
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88. Compare and contrast a free trade area and a common market. Provide examples.
89. Discuss the economic case for economic integration. How does it relate to trade theory?
90. What is the political case for integration? How did political arguments influence the
establishment of the European Union?
9-23
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91. How easy is it for countries to integrate?
92. Some economists have expressed concerns that the benefits of regional integration have
been touted while the costs have been ignored. Explain the view of these economists.
9-24
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94. Briefly describe the four main institutions that make up the political structure of the EU.
95. What is the Single European Act? What was the effect of the Single European Act on the EU
economy? Did the Single European Act achieve its goals?
9-25
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97. How will EU countries benefit from the establishment of a single currency? What, if any, are
the costs of a single currency?
98. Debate the ratification of the North American Free Trade Agreement.
99. Discuss why NAFTA's most significant impact has been a political one, not an economic one.
9-26
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100.Explain how Mercosur has changed over time. What are the implications of these changes?
101.Discuss the Free Trade Area of the Americas. What is hindering its progress? What is the
position of the U.S. on the agreement? How does Brazil feel about the FTAA?
9-27
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103.Describe the state of economic integration in Africa. What factors have hindered the
process?
104.Discuss the opportunities arising from the creation of the EU for international businesses.
105.Describe the disadvantages of economic integration for international businesses. How can
firms protect themselves from these threats?
9-28
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Chapter 09 Regional Economic Integration Answer Key
TRUE
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 09-01 Describe the different levels of regional economic integration.
Topic: Introduction
2. The movement toward regional economic integration been most successful in Asia.
FALSE
Nowhere has the movement toward regional economic integration been more successful
than in Europe.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
9-29
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McGraw-Hill Education.
Difficulty: 1 Easy
Learning Objective: 09-01 Describe the different levels of regional economic integration.
Topic: Introduction
3. In a customs union, trade barriers are eliminated among member countries, and each
country maintains its own external trade polices with nonmember countries.
FALSE
A customs union eliminates trade barriers between member countries and adopts a
common external trade policy.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 09-01 Describe the different levels of regional economic integration.
Topic: Levels of Economic Integration
4. A common market has no barriers to trade between member countries, includes a common
external trade policy, and allows factors of production to move freely between members.
TRUE
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 09-01 Describe the different levels of regional economic integration.
Topic: Levels of Economic Integration
9-30
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McGraw-Hill Education.
5. A common market entails even closer economic integration and cooperation than an
economic union.
FALSE
An economic union entails even closer economic integration and cooperation than a
common market.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 09-01 Describe the different levels of regional economic integration.
Topic: Levels of Economic Integration
FALSE
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 09-01 Describe the different levels of regional economic integration.
Topic: Levels of Economic Integration
9-31
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McGraw-Hill Education.
7. Coordination and policy harmonization problems are largely a function of the number of
countries that seek agreement.
TRUE
The greater the number of countries involved, the more perspectives that must be
reconciled, and the harder it will be to reach agreement.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 09-02 Understand the economic and political arguments for regional economic integration.
Topic: Levels of Economic Integration
TRUE
Linking neighboring economies and making them increasingly dependent on each other
creates incentives for political cooperation between the neighboring states and reduces
the potential for violent conflict.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 09-02 Understand the economic and political arguments for regional economic integration.
Topic: The Case for Regional Integration
9-32
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McGraw-Hill Education.
9. Because of the fact that everyone benefits from economic integration, it is easy to achieve
and sustain.
FALSE
While a nation as a whole may benefit significantly from a regional free trade agreement,
certain groups may lose.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 09-02 Understand the economic and political arguments for regional economic integration.
Topic: The Case for Regional Integration
TRUE
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 09-02 Understand the economic and political arguments for regional economic integration.
Topic: The Case for Regional Integration
9-33
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McGraw-Hill Education.
11. Trade diversion occurs when higher-cost external producers are replaced by lower-cost
external producers within the free trade area.
FALSE
Trade creation occurs when higher-cost external producers are replaced by lower-cost
external producers within the free trade area.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 09-03 Understand the economic and political arguments against regional economic integration.
Topic: The Case Against Regional Integration
12. In theory, WTO rules should ensure that a free trade agreement results in trade diversion.
FALSE
In theory, WTO rules should ensure that a free trade agreement does not result in trade
diversion.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 09-03 Understand the economic and political arguments against regional economic integration.
Topic: The Case Against Regional Integration
9-34
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13. 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
A regional free trade agreement will benefit the world only if the amount of trade it creates
exceeds the amount it diverts.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 09-03 Understand the economic and political arguments against regional economic integration.
Topic: The Case Against Regional Integration
14. There are two main trading blocs in Europe, the European Union and the European Free
Trade Association.
TRUE
Europe has two trade blocs—the European Union and the European Free Trade
Association.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
9-35
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15. The Treaty of Rome, signed in 1957, established the European Free Trade Association.
FALSE
With the signing of the Treaty of Rome in 1957, the European Community was established.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
16. 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
The European Union (EU) is the product of two political factors: (1) the devastation of
Western Europe during two world wars and the desire for a lasting peace, and (2) the
European nations' desire to hold their own on the world's political and economic stage.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
9-36
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McGraw-Hill Education.
17. The Council of the European Union is responsible for proposing EU legislation,
implementing it, and monitoring compliance with EU laws by member states.
FALSE
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
18. The ultimate controlling unit within the EU is the European Council.
TRUE
The European Council represents the interests of member states. It is clearly the ultimate
controlling authority.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
9-37
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McGraw-Hill Education.
19. The European Parliament is primarily a consultative rather than legislative body.
TRUE
The European Parliament, which now has 732 members, is directly elected by the
populations of the member states. It is primarily a consultative rather than legislative
body.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
20. The judges of the European Court of Justice are required to act as representatives of
national interests, rather than as independent officials.
FALSE
The judges are required to act as independent officials, rather than as representatives of
national interests.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
9-38
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McGraw-Hill Education.
21. The establishment of the euro required participating countries to give up their monetary
policy.
TRUE
Establishing the euro required participating national governments not only to give up their
own currencies, but also to give up control over monetary policy.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
22. The Single European Act committed EU countries to adopting a common currency by
January 1, 1999.
FALSE
In December 1991, EC members signed a treaty (the Maastricht Treaty) that committed
them to adopting a common currency by January 1, 1999.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
9-39
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McGraw-Hill Education.
23. Establishment of the euro created the largest currency zone in the world, replacing the
position the U.S. dollar had held for decades.
FALSE
By adopting the euro, the EU has created the second most widely traded currency in the
world after that of the U.S. dollar.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
24. Great Britain, Sweden, and France have led the push toward adopting the euro.
FALSE
Three long-term EU members, Great Britain, Denmark, and Sweden, are still sitting on the
sidelines. They have not adopted the euro.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
9-40
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25. A key benefit resulting from the adoption of the euro is the ability to compare prices
across member markets.
TRUE
The adoption of a common currency makes it easier to compare prices across Europe. This
has been increasing competition because it has become easier for consumers to shop
around.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
26. The implied loss of national sovereignty to the ECB underlies the decision by Great Britain,
Denmark, and Sweden to stay out of the euro zone for now.
TRUE
The implied loss of national sovereignty to the ECB underlies the decision by Great Britain,
Denmark, and Sweden to stay out of the euro zone for now.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
9-41
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27. Since its establishment, the euro has had a stable trading history.
FALSE
Since its establishment January 1, 1999, the euro has had a volatile trading history against
the world's major currency, the U.S. dollar.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in Europe
28. On average, studies indicate that NAFTA's overall impact has been small but positive.
TRUE
Studies of NAFTA's impact suggest its initial effects were at best muted, and both
advocates and detractors may have been guilty of exaggeration. On average, studies
indicate that NAFTA's overall impact has been small but positive.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in the Americas
9-42
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
29. The governments of both Canada and the United States are keen on adding other Latin
American countries to NAFTA.
FALSE
A number of other Latin American countries have indicated their desire to eventually join
NAFTA. The governments of both Canada and the United States are adopting a wait-and-
see attitude with regard to most countries.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in the Americas
30. The Andean Pact is a highly successful common market modeled after the EU.
FALSE
The Andean Pact was largely based on the EU model, but was far less successful at
achieving its stated goals.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in the Americas
9-43
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
31. According to Alexander Yeats, the trade diversion effects of Mercosur outweigh its trade
creation effects.
TRUE
Alexander Yeats, a critic of the Mercosur, points out that the trade diversion effects of
Mercosur outweigh its trade creation effects.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in the Americas
32. The Free Trade Area of the Americas that was established in 2005 has thus far proven to
be a success.
FALSE
Currently, however, FTAA is very much a work in progress, and the progress has been
slow.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration in the Americas
9-44
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
33. The bulk of intra-ASEAN trade consisted of goods whose tariffs had been reduced through
an ASEAN preferential trade arrangement.
TRUE
Until recently, only 5 percent of intra-ASEAN trade consisted of goods whose tariffs had
been reduced through an ASEAN preferential trade arrangement.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration Elsewhere
TRUE
The stated aim of APEC is to increase multilateral cooperation in view of the economic
rise of the Pacific nations and the growing interdependence within the region.
AACSB: Analytic
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 09-04 Explain the history; current scope; and future prospects of the world's most important regional
economic agreements.
Topic: Regional Economic Integration Elsewhere
9-45
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
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