Exploring the Costs and Benefits of Regional Trading Blocs
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Questions and Answers

Which of the following is an example of a regional trading bloc?

  • North American Free Trade Agreement (NAFTA) (correct)
  • Organization of Petroleum Exporting Countries (OPEC)
  • International Monetary Fund (IMF)
  • World Trade Organization (WTO)

    • What is the main purpose of a regional trading bloc?

  • To establish a military alliance among member countries
  • To reduce and eliminate barriers to trade among member countries (correct)
  • To increase trade barriers with non-member countries
  • To create a common currency for member countries

    • Which type of regional integration involves the free movement of goods and services among members, while maintaining individual trade policies against non-members?

  • Customs union
  • Economic union
  • Free trade area (correct)
  • Common market

    • What is the next level of economic integration after a customs union?

    <p>Common market</p> Signup and view all the answers

    Which regional trading bloc includes Argentina, Brazil, Paraguay, and Uruguay?

    <p>Southern Cone Common Market (MERCOSUR)</p> Signup and view all the answers

    Which of the following is NOT a type of regional trading bloc?

    <p>International trade organization</p> Signup and view all the answers

    Which of the following regional trading blocs became part of the European Community in 1958?

    <p>Benelux</p> Signup and view all the answers

    Which organization deals with the rules of global trade between nations and where member countries can sort out trade disputes?

    <p>World Trade Organization</p> Signup and view all the answers

    What is the term used to describe a movement toward freer trade among a small group of countries?

    <p>Regional integration</p> Signup and view all the answers

    When did the European Community become the European Union?

    <p>1993</p> Signup and view all the answers

    What happens when regional integration results in the replacement of higher-cost domestic production by lower-cost imports from other members?

    <p>Trade creation</p> Signup and view all the answers

    What is the term used to describe the scenario where lower-cost imports from non-member countries are replaced with higher-cost imports from members?

    <p>Trade diversion</p> Signup and view all the answers

    What are the two static effects that are direct results of the formation of a customs union?

    <p>Trade creation and trade diversion</p> Signup and view all the answers

    What are the reasons why regional integration is popular?

    <p>It is easier to eliminate trade barriers among a small group of countries than through multilateral trade negotiations</p> Signup and view all the answers

    Which of the following is NOT a benefit of regional trading blocs?

    <p>Increased conflict among member countries</p> Signup and view all the answers

    What is one advantage of regional trading blocs mentioned in the text?

    <p>Increased bargaining power and political clout</p> Signup and view all the answers

    What is the potential impact of strong growth in one regional trading bloc country on other member countries?

    <p>Positive impact on growth</p> Signup and view all the answers

    What is one disadvantage of regional integration mentioned in the text?

    <p>Higher adjustment costs for workers</p> Signup and view all the answers

    What is one potential long-term consequence for workers displaced by regional integration?

    <p>Remaining unemployed for a long period of time</p> Signup and view all the answers

    What is one challenge to the formation of regional trading blocs mentioned in the text?

    <p>Concerns regarding national sovereignty</p> Signup and view all the answers

    What are the potential forms of deeper integration mentioned in the text?

    <p>Customs union, common market, or economic union</p> Signup and view all the answers

    Which of the following is a potential complication of the social and political process of integration?

    <p>Historical considerations</p> Signup and view all the answers

    What limits the extent to which member countries can pursue independent economic and social policies?

    <p>Economic integration</p> Signup and view all the answers

    Which factor limits the viability of divergent macroeconomic policies in a monetary union?

    <p>Monetary policy control</p> Signup and view all the answers

    What can persistent imbalances in a monetary union lead to?

    <p>Economic turmoil</p> Signup and view all the answers

    Which event in 2010 led to fears of economic turmoil in the EU and beyond?

    <p>Greece's credit downgrade</p> Signup and view all the answers

    What did the EU and the IMF provide to Greece and Ireland in 2010?

    <p>Financial aid packages</p> Signup and view all the answers

    Why is regional integration important from an investment perspective?

    <p>Lower cost of doing business</p> Signup and view all the answers

    What may limit the potential benefits from investments within a trading bloc?

    <p>Differences in tastes</p> Signup and view all the answers

    What can problems faced by individual member countries in a Regional Trade Agreement (RTA) potentially do?

    <p>Spread to other countries in the bloc</p> Signup and view all the answers

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