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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.

E) A) and B)
F) A) and C)

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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

E) A) and B)
F) A) and C)

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The Council of the European Union is responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states.

A) True
B) False

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A benefit to companies of economic integration is the opportunity to centralize their production and reduce costs.

A) True
B) False

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Which of the following is directly elected by the populations of the member states and is primarily a consultative rather than legislative body?


A) the European Parliament
B) the European Commission
C) the Council of the European Union
D) the Court of Justice

E) A) and B)
F) A) and C)

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A

How does the NAFTA seem to increase the international competitiveness of U.S. and Canadian firms?


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.

E) A) and B)
F) All of the above

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According to Alexander Yeats


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.

E) A) and D)
F) B) and C)

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________ entails even closer economic integration and cooperation than a common market.


A) A customs union
B) A free trade area
C) An economic union
D) A political union

E) A) and B)
F) All of the above

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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

E) B) and D)
F) A) and B)

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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

E) A) and B)
F) All of the above

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The establishment of the euro required participating countries to


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.

E) A) and C)
F) All of the above

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Which of the following is seen to be a consequence of the expansion of the EU from 15 nations to 28 nations?


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

E) A) and B)
F) B) and C)

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Which of the following was the outcome of the Treaty of Lisbon signed in 2007?


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.

E) B) and D)
F) None of the above

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The European Community was established by the


A) Treaty of Rome signed in 1957.
B) Maastricht Treaty signed in 1992.
C) Maastricht Treaty of 1994.
D) Single European Act of 1987.

E) A) and B)
F) None of the above

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A

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

E) A) and B)
F) A) and C)

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Concerns about national sovereignty in the EU have been a major impediment to economic integration.

A) True
B) False

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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) 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.

E) C) and D)
F) A) and B)

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B

How has the euro contributed to increasing competition in the European region?


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

E) A) and D)
F) B) and C)

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________ 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) An economic union
B) A common market
C) A customs union
D) A full political union

E) All of the above
F) A) and C)

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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.

E) A) and B)
F) None of the above

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