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.
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A) efficiency gain
B) trade diversion
C) trade deficit
D) trade creation
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A) the European Parliament
B) the European Commission
C) the Council of the European Union
D) the Court of Justice
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A) It gives them access to scarce natural resources hitherto unavailable.
B) It increases tariff barriers making the North American market less attractive to Asian companies.
C) It allows them to take advantage of lower labor costs in Mexico.
D) It gives them production bases in South American markets such as Brazil and Argentina.
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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.
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A) A customs union
B) A free trade area
C) An economic union
D) A political union
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A) Alexander Yeats
B) the majority of economists
C) Jacques Delors
D) the World Trade Organization
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A) a common market
B) a free trade pact
C) a customs union
D) an economic union
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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.
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A) delays in decision-making processes
B) elimination of the sovereign debt crisis
C) euro becoming the most traded currency in the world
D) huge initial impact on the overall economic welfare
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A) It established the European Community.
B) It resulted in the adoption of the euro.
C) It changed the name of the European Community to the European Union.
D) It increased the power of the European Parliament.
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A) Treaty of Rome signed in 1957.
B) Maastricht Treaty signed in 1992.
C) Maastricht Treaty of 1994.
D) Single European Act of 1987.
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A) job losses
B) balance-of-payment problems
C) threat of competition from Asian companies
D) threat of a loss of national sovereignty
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A) common market, a free trade area, an economic union, a customs union, and a political union.
B) free trade area, a customs union, a common market, an economic union, and a political union.
C) customs union, a free trade area, a common market, a political union, and an economic union.
D) common market, an economic union, a customs union, a free trade area, and a political union.
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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
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A) An economic union
B) A common market
C) A customs union
D) A full political union
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A) large but negative.
B) large and positive.
C) small and negative.
D) small but positive.
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