Drexel INTB 200 Final Review Exam And
Accurate Answers .
Regional Economic Integration - Answer agreements between countries in a geographic region
to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of
production between each other
Levels of Regional Economic Integration - Answer 1. Free Trade Area
2. Customs Union
3. Common Market
4. Economic Union
5. Political Union
Free Trade Area - Answer eliminates all barriers to the trade of goods and services among
member countries
ex. NAFTA: US, Canada, Mexico
EFTA: Norway, Iceland, Lichtenstein, Switzerland
Customs Union - Answer eliminates trade barriers between member countries and adopts an
external trade policy
ex. Andean Community: Peru, Bolivia, Colombia, Ecuador
Common Market - Answer has no barriers to trade between member countries, a common
external trade policy, and the free movement of the factors of production
ex. MERCOSUR: Brazil, Argentina, Paraguay, Uruguay
Economic Union - Answer has the free flow of products and factors of production between
members, a common external trade policy, a common currency, a harmonized tax rate, and a
common monetary and fiscal policy
ex. The EU
Political Union - Answer involves a central political apparatus that coordinates the economic,
social, and foreign policy of member states
, Linking countries together to make them more dependent of each other, creates incentives for
political cooperation and reduces the likelihood of violent conflict among member countries,
gives countries greater political standings when dealing with other nations
Efforts that Limit Integration - Answer Economic Integration can be difficult because:
a nation as a whole may benefit from regional economic integration, yet some groups may lose
implies loss of sovereignty
Economic Integration is only beneficial if the amount of trade it creates exceeds the amount of
trade it diverts
The European Union , Background - Answer Created after WWI & WWII, Europe wanted long-
lasting peace and to hold their own on the world's political and economic stage
Forerunner was the European Coal & Steel Community (1951)
The European Economic Community (1957) was formed at the Treaty of Rome with goal of
becoming a common market
The Single European Act (1987)
The Single European Act - Answer 1987
committed the EC countries to work towards a single market to be established by December
31st 1992
created out of frustration from EC members that the community was not living up to its promise
provided the force of the restructuring of substantial sections of European industry allowing for
faster economic growth than what otherwise would be the case
trade diversion - Answer occurs when high cost suppliers within the free trade area replace
the low cost external supplies
trade creation - Answer occurs when low cost producers within the free trade area replace the
high cost domestic producers
The European Council - Answer the ultimate controlling authority within the EU
Accurate Answers .
Regional Economic Integration - Answer agreements between countries in a geographic region
to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of
production between each other
Levels of Regional Economic Integration - Answer 1. Free Trade Area
2. Customs Union
3. Common Market
4. Economic Union
5. Political Union
Free Trade Area - Answer eliminates all barriers to the trade of goods and services among
member countries
ex. NAFTA: US, Canada, Mexico
EFTA: Norway, Iceland, Lichtenstein, Switzerland
Customs Union - Answer eliminates trade barriers between member countries and adopts an
external trade policy
ex. Andean Community: Peru, Bolivia, Colombia, Ecuador
Common Market - Answer has no barriers to trade between member countries, a common
external trade policy, and the free movement of the factors of production
ex. MERCOSUR: Brazil, Argentina, Paraguay, Uruguay
Economic Union - Answer has the free flow of products and factors of production between
members, a common external trade policy, a common currency, a harmonized tax rate, and a
common monetary and fiscal policy
ex. The EU
Political Union - Answer involves a central political apparatus that coordinates the economic,
social, and foreign policy of member states
, Linking countries together to make them more dependent of each other, creates incentives for
political cooperation and reduces the likelihood of violent conflict among member countries,
gives countries greater political standings when dealing with other nations
Efforts that Limit Integration - Answer Economic Integration can be difficult because:
a nation as a whole may benefit from regional economic integration, yet some groups may lose
implies loss of sovereignty
Economic Integration is only beneficial if the amount of trade it creates exceeds the amount of
trade it diverts
The European Union , Background - Answer Created after WWI & WWII, Europe wanted long-
lasting peace and to hold their own on the world's political and economic stage
Forerunner was the European Coal & Steel Community (1951)
The European Economic Community (1957) was formed at the Treaty of Rome with goal of
becoming a common market
The Single European Act (1987)
The Single European Act - Answer 1987
committed the EC countries to work towards a single market to be established by December
31st 1992
created out of frustration from EC members that the community was not living up to its promise
provided the force of the restructuring of substantial sections of European industry allowing for
faster economic growth than what otherwise would be the case
trade diversion - Answer occurs when high cost suppliers within the free trade area replace
the low cost external supplies
trade creation - Answer occurs when low cost producers within the free trade area replace the
high cost domestic producers
The European Council - Answer the ultimate controlling authority within the EU
