MGT361- Chapter 2: Regional Economic Integration

Economic Integration that requires its members to coordinate their economic policies (monetary, fiscal, taxation & social welfare) in order to blend their economies into a single entity is:

• Free Trade Area

• Custom Union

• Common Market

• Economic Union

Free Trade Area is considered to have the highest level of regional integration.

• True

• False

NAFTA is an example of a common market.

• True

• False

Common market eliminate internal trade barriers among themselves, adopt a common external trade policy toward nonmembers and encourage the movement of_____________

• similar usage of currency

• factors of production

• complete political integration

• similar tax rate

European Union is an example of economic union integration.

• True

• False

All of these are the economic reasons for regional integration, except:

• Benefiting from the free flow of trade and investment

• Specialized in the production of goods

• Free movement of factors of production

• Reduce potential violent conflict

All of these are the opportunities arising from regional economic integration, except:

• Countries may operate at a lower cost

• Standardized tax regimes

• Discrimination in political power

• Firms may serve all countries from a single location

Which level of integration allows its members using common currency to trade among each other?

• Free Trade Area

• Custom Union

• Common Market

• Economic Union

All countries will benefit from regional economic integration.

• True

• False

With regional economic integration, business environment now will become more competitive.

• True

• False