Regional economic integration

Regional economic integration involves agreements among countries in a

geographic region to reduce, and ultimately remove, tariff and nontariff barriers to

the free flow of goods, services, and factors of production between each other.

• True

• False

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

Trade diversion occurs when higher-cost external producers are replaced by lower-

cost external producers within the free trade area

• True

• False

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?

• Free Trade Area

• Custom Union

• Common Market

• Common Union

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.

• free trade area

• common market

• custom union

• economic union

Which feature of an economic union differentiates it from a common market?

• Free flow of products and factors of production among countries

• A common monetary and fiscal policy

• A common external policy towards nonmembers

• Ability of factors of production to move among members

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 common market

• A free trade area

• An economic union

• A political union

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?

• Non tariff barriers

• Energy market

• Services

• Tax rates

The European Community was established by:

• the Single European Act of 1987

• the Masstricht Treaty 1994

• the Masstricht Treaty 1991.

• the Treaty of Rome signed in

  1957

The _____ is responsible for proposing EU legislation, implementing it, and

monitoring compliance with EU laws by member states.

• European Commission

• European Parliament

• Court of Justice

• Council of European Union