Question: Identify the correct sequence of economic integration starting from the least integrated to the most integrated.

Answer: free trade areacustoms unioncommon marketeconomic unionpolitical union

Question: Which of the following refers to a group of countries committed to removing all barriers to the free flow of goods and services between each other but pursuing independent external trade policies?

Answer: free trade area

Question: A(n) _____ has no barriers to trade among member countries, includes a common external trade policy, and allows factors of production to move freely among members, but does not have a common currency.

Answer: common market

Question: Which of the following is a political argument for regional economic integration?

Answer: It reduces the potential for violent conflict.

Question: When higher-cost domestic producers are replaced by lower-cost external producers within a free trade area it sets the stage for...

Answer: trade creation

Question: Two countries, Cadmia and Palladia, have formed a free trade agreement. This has resulted in Cadmia importing sugar from Palladia, which Cadmia previously imported from another country at a lower cost. This is an example of...

Answer: trade diversion

Question: The European Community was established by the...

Answer: Treaty of Rome

Question: Which treaty committed EC members to adopting a common currency by January 1, 1999?

Answer: Maastricht Treaty

Question: Which of the following is true with regard to NAFTA?

Answer: NAFTA has increased trade between Canada, Mexico, and the United States.

Question: When war broke out between Honduras and El Salvador, the _____ trade pact collapsed.

Answer: Central American Common Market