Introduction to Global Business Gaspar 2e TestBank Introduction to Global Business Gaspar 2e TestBank

Introduction to Global Business Gaspar 2e TestBank Introduction to Global Business Gaspar 2e TestBank Testbank Introduction to Global Business Gaspar 2e TB1. With business becoming increasingly global, its success, fortunately, depends only on the domestic environment. a. True b. False ANSWER: False 2. Key aspects of globalization include the elimination of barriers to trade and information technology. a. True b. False ANSWER: True 3. The world economy is quickly shifting away from countries with emerging economies. a. True b. False ANSWER: False 4. The “soft” qualities essential to globalization include openness, protectionism, accountability, connectivity, democracy, and centralization. a. True b. False ANSWER: False 5. A sustainable decoupling process would eventually lead to a multi-polar world—a world economy in which the engines of growth could comprise the United States, the European Union, China, India, Brazil, Russia, and South Africa rather than the United States alone. a. True b. False ANSWER: True 6. The openness and proliferation of globalization and free trade rules can best be attributed to the interwar period between World War I and II. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero. Page 1 Name: Class: Date: Chapter 01: The Rise of Globalization7. As part of the World Bank’s Strategic Framework, there are five focus areas that accommodate and facilitate the globalization process including its analytical and advisory role supporting national policies to strengthen free market institutions and infrastructure that has provided the potential for creating large gains from trade. a. True b. False ANSWER: True 8. For the World Trade Organization, increasing trade barriers has been one of the most simple ways to encourage trade and globalization. a. True b. False ANSWER: False 9. The foundations of the globalized business world are political—and so are the biggest threats to the system. a. True b. False ANSWER: True 10. Countries that have successfully adapted to globalization realize that they cannot succeed without high-quality government management at home. a. True b. False ANSWER: True 11. In communist and state-controlled economies like those in Central Asia property rights either do not exist or are not well defined which discourages domestic and foreign investors from making long-term commitments in these countries. a. True b. False ANSWER: True 12. Globalized economies like New Zealand and Singapore rank at the top in index for absence of corruption by Transparency International. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero. Page 2 Name: Class: Date: Chapter 01: The Rise of Globalization13. Text messaging will likely be an unimportant component of emerging economies' mobile phone usage because most people in these countries cannot read or write. a. True b. False ANSWER: False 14. Critics argue that open trade and foreign direct investment always take jobs from workers in developing economies and transfer them to workers in advanced industrial countries which leave the workers in the developing country, out of work. a. True b. False ANSWER: False 15. There appears to be a clear connection between economic freedom and political freedom. a. True b. False ANSWER: True 16. Brazilian Juice, a manufacturer of healthy fruit juices in Brazil, sells juice in six different countries including United States. Brazilian juice is engaging in a. economic development in United States. b. exercising nontariff barriers in Brazil. c. unfair trade practices. d. globalization. e. the World Trade Bank Group. ANSWER: d 17. Which of the following is NOT a key aspect of globalization? a. The elimination of barriers to trade b. Investment c. Financial independence d. Culture e. Information technology ANSWER: c Copyright Cengage Learning. Powered by Cognero. Page 3 Name: Class: Date: Chapter 01: The Rise of Globalization18. Countries that have been moving toward more open trade and free market policies are known as _____. a. African countries b. open-door economies c. industralized countries d. globalized economies e. emerging economies ANSWER: e 19. Increasingly, emerging economies are a. innovative and technologically advanced. b. sources of inexpensive labor. c. largely agricultural. d. simply copying the technologies used in more advanced economies. e. being left behind in the global economy. ANSWER: a 20. A sustainable decoupling process would eventually lead to _____. a. a multi-polar world b. globalization c. outsourcing d. transparency e. income inequity ANSWER: a 21. A world economy in which the engines of growth could comprise the United States, the European Union, China, India, Brazil, Russia, and South Africa rather than the United States alone can be described as a(n) __________. a. interdependent world b. industrialized world c. globalized economy d. multi-polar world e. diverse world ANSWER: d Copyright Cengage Learning. Powered by Cognero. Page 4 Name: Class: Date: Chapter 01: The Rise of Globalization22. According to the authors, which of the following is NOT true regarding globalization lessons for developing countries? a. Import oriented nations must switch to concentrate on domestication. b. Export oriented nations must diversify their market to include major emerging economies. c. Countries emphasizing exports should base their strategy on their true competitive advantage. d. For countries with large populations, the size of the domestic market remains most important. e. Overindulgence can lead to disaster. ANSWER: a 23. Which of the following is NOT a main purpose of the IMF? a. Provide a forum for cooperation on international monetary problems b. Facilitate the sustainable growth of international trade c. Promote exchange rate stability d. Lend countries foreign exchange when needed e. Provide long-term low-interest social sector and infrastructure loans ANSWER: e 24. What was the initial primary role of the World Bank? a. To aide in the reconstruction of Europe after World War II b. To provide low-interest mortgage loans to minorities c. To try to avoid a repetition of the disastrous economic policies that had contributed to the Great Depression. d. To deal primarily with tariff negotiations e. To provide loans and take equity position in private companies ANSWER: a 25. The International Bank for Reconstruction and Development performs which of the following functions? a. Provides long-term low-interest social sector and infrastructure loans to the poorest members utilizing foreign aid funds provided by rich nation members b. Provide loans and take equity position in private companies of developing countries and works toward developing capital markets in those economies c. Supports reconstruction and restructuring of member countries utilizing funds raised in international capital markets d. Provides political risk coverage for private investments made in developing countries e. Works on issues related to foreign investment disputes ANSWER: c Copyright Cengage Learning. Powered by Cognero. Page 5 Name: Class: Date: Chapter 01: The Rise of Globalization26. The Multilateral Investment Guarantee Agency performs which of the following functions? a. Provides long-term low-interest social sector and infrastructure loans to the poorest members utilizing foreign aid funds provided by rich nation members b. Provide loans and take equity position in private companies of developing countries and works toward developing capital markets in those economies c. Supports reconstruction and restructuring of member countries utilizing funds raised in international capital markets d. Provides political risk coverage for private investments made in developing countries e. Works on issues related to foreign investment disputes ANSWER: d 27. The International Finance Corporation (IFC) performs which of the following functions? a. Provides long-term low-interest social sector and infrastructure loans to the poorest members utilizing foreign aid funds provided by rich nation members b. Provide loans and take equity position in private companies of developing countries and works toward developing capital markets in those economies c. Supports reconstruction and restructuring of member countries utilizing funds raised in international capital markets d. Provides political risk coverage for private investments made in developing countries e. Works on issues related to foreign investment disputes ANSWER: b 28. Which of the following is NOT an objective of the WTO? a. Reviewing national trade policies b. Acting as a forum for trade negotiations c. Naming commissioners to local trade organizations d. Settling trade disputes e. Administering trade agreements ANSWER: c Copyright Cengage Learning. Powered by Cognero. Page 6 Name: Class: Date: Chapter 01: The Rise of Globalization29. Trade without discrimination, freer trade, predictability, promotion of fair competition, and _____ are the five principles of the multilateral trading system. a. integrated capital markets b. encouragement of economic reform in developing countries c. liberalization of the trading system d. nontariff trade e. establishment of "most favored nation" status ANSWER: b 30. In Brazil, if there are government organizations that create strong incentives for private investment and operate under a system of checks and balances that function best in a democratic system of government, they could be classified as which of these? a. Transparent organizations b. Antitrust corporations c. Adaptive institutions d. Emerging markets e. Capital markets ANSWER: c 31. To sustain globalization, nations must build institutions that support all of the following EXCEPT a. democratic systems of government. b. free markets. c. command economies. d. independent judiciaries. e. a free press. ANSWER: c 32. ​The most recent devices that enable the greatest ease in portability and accessibility of information are ______. a. ​magazines b. ​newspapers c. ​advertisements d. ​smart phones e. ​computers ANSWER: d Copyright Cengage Learning. Powered by Cognero. Page 7 Name: Class: Date: Chapter 01: The Rise of Globalization33. In India, several politicians are working very hard toward a system of full disclosure and openness that aims to avoid any semblance of corruption and cronyism. These efforts can be described as creating a system focused on _____. a. politics b. integrity c. accountability d. transparency e. democracy ANSWER: d 34. Which of the following is NOT true regarding competitive markets? a. Successfully globalized economies strive to attain competitive markets at home. b. Governments try to minimize the role of state-owned enterprises in market economies. c. Regulations that promote free domestic markets also tend to promote globalization. d. Antitrust laws must be eliminated if competitive markets re to be sustained. e. Antitrust laws interfere with the natural growth of successful businesses. ANSWER: d 35. Illicit dealings undermine economic performance by doing all of the following EXCEPT: a. decreasing costs. b. raising competition. c. thwarting competition. d. reducing transparency. e. raising insecurity. ANSWER: a 36. ABC Technology touts in their advertisements that their technology can transfer huge amount of data and other information in a second via the Internet. This describes ABC’s _____ in technology. a. bandwith b. digital server c. digital divide d. gigabytes e. Y2K ANSWER: a Copyright Cengage Learning. Powered by Cognero. Page 8 Name: Class: Date: Chapter 01: The Rise of Globalization37. The rapid fall in prices of digital IT equipment and services may a. reduce the importance of IT in the global economy. b. spell the end of the digital era. c. make digital divide a myth. d. reduce the availability of bandwidth in developed economies. e. localize the production of goods and services. ANSWER: c 38. Of the following, which is NOT true regarding the Internet and cell phone era? a. Fortunately, the next billion users will be the same as the first billion b. The majority of users will be from developing countries c. Text messaging will likely predominate emerging economies; mobile phone usage d. Countries are skipping the use of land-line technology and jumping to wireless systems e. Developing countries may “leapfrog” an entire generation of technology ANSWER: a 39. All of the following are arguments against globalization EXCEPT: a. it may lead to an increase in the appearance of old industries. b. it may lead to a loss of control over economic policies and developments. c. it may lead to an erosion of communities. d. it can be a force of exploitation and injustice. e. it can cause job losses and stagnant wages. ANSWER: a 40. The only way workers in industrialized countries can compete with their counterparts in the developing world will be through: a. increased use of the cost leadership strategy. b. increased diversity within the organization. c. increased empowerment of employees. d. increased productivity by using technologically-intensive manufacturing technologies. e. increased flat organization structure. ANSWER: d Copyright Cengage Learning. Powered by Cognero. Page 9 Name: Class: Date: Chapter 01: The Rise of Globalization41. An office uses printer paper made primarily of recycled paper. This is an example of a ______ policy. a. future sourcing b. global warming c. next-generation consumer hook d. digital divide e. sustainable development ANSWER: e 42. Which of the following is NOT true regarding results from a survey by the World Bank on corporate social responsibility (CSR)? a. CSR practices are now a significant factor in determining where multinational companies conduct business. b. 90% of the companies surveyed have board-approved policies on environmental management. c. 90% of multinationals will make their decisions based on CSR issues with regard to foreign direct investment. d. CSR issues consistently implemented for the long term lead to sustainable business and development. e. CSR includes issues such as labor rights, corruption, human rights, community health, and land rights. ANSWER: c 43. Successive waves of globalization include characteristics such as the expansion of trade, the diffusion of technology, extensive migration, and _____. a. improvements in country infrastructure b. increased employee morale c. improved healthcare d. financial independence e. cross-fertilization of diverse cultures ANSWER: e 44. Which of the following is NOT true regarding globalization? a. It guarantees that quality of life for all people will increase. b. It creates winners and losers. c. It has the potential to increase the quality of life for people. d. Some multinational companies will utilize globalization may try to pay substandard wages to the workers they employ in developing countries. e. Export barriers may need to be imposed by the WTO to help regulate the actions of multinational companies. ANSWER: a Copyright Cengage Learning. Powered by Cognero. Page 10 Name: Class: Date: Chapter 01: The Rise of Globalization45. All of the following countries can be considered globalization “winners” EXCEPT: a. China b. North Korea c. India d. Brazil e. South Africa ANSWER: b 46. _______ refers to a fundamental global shift in which industrialized country-dependent developing economies begin to grow based on their own underlying economic strengths rather than the ups and downs of the world’s richest countries. ANSWER: Decoupling 47. A world economy in which the engines of growth could comprise several major industrialized and emerging market economies such as the United States, the European Union, China, India, Brazil, Russia, and South Africa rather than the United States alone is called ______. ANSWER: multi-polar world 48. The World Bank was conceived at the ________ Conference in 1944. ANSWER: Bretton Woods 49. A stock exchange where long-term financial instruments such as stocks and bonds can be bought and sold refers to _______. ANSWER: capital markets 50. The rules, enforcement mechanisms, and organizations that support market transactions are called ______. ANSWER: institutions 51. A system of responsibility in which an authority, such as the government, is answerable for its actions refers to ________. ANSWER: accountability 52. National laws aimed at maintaining competition in all sectors of the economy and preventing monopolistic behavior of firms are called _______. ANSWER: antitrust laws 53. The period of transformation that adjusts lifestyles to make the Internet and wireless technologies a part of everyday life refers to the ______. ANSWER: digital era Copyright Cengage Learning. Powered by Cognero. Page 11 Name: Class: Date: Chapter 01: The Rise of Globalization54. The _______ is a system of interlinked documents contained and accessed via the Internet. ANSWER: web 55. Economic development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs, whether environmentally, socially or economically is called ______. ANSWER: sustainable development 56. Differentiate between the International Monetary Fund and the World Bank as institutions facilitating globalization. ANSWER: Student answers will vary. 57. Analyze the impact of transparency on globalization. ANSWER: Student answers will vary. 58. Identify and describe any two key policy measures that make globalization sustainable. ANSWER: Student answers will vary. 59. Given the rapid advancements in technology in developed countries and fast pace of globalization, it is not possible to bridge the global digital divide. Do you agree with this statement? Why or why not? Explain. ANSWER: Student answers will vary. 60. What are the best ways industrialized countries can support globalization's "losers"? Support your position using examples. ANSWER: Student answers will vary. Copyright Cengage Learning. Powered by Cognero. Page 12 Name: Class: Date: Chapter 01: The Rise of GlobalizationScenario – T & M Computers Thomas Benson and Matthew Roderick started a small computer business ten years ago in Rapid City, South Dakota. Armed only with determination and innovative designs, Thomas and Matthew were driven to achieve success for their company, T & M Computers. Their hard work has indeed, paid off. Since the inception of the company, the two owners have watched their business grow and demand for their products increase. Four years ago due to this high product demand, they went international with their business operations. Thomas and Matthew now have international business operations in Singapore, France, Turkey, and Great Britain. Further operational expansion is anticipated within the next year and the company plans to begin operations in Spain, Greece, and Italy. The owner’s hard work and dynamic ideas have proven quite profitable for the company. Thomas and Matthew are pleased with how their operation has grown into becoming a major international business worthy of competing with Intel and Microsoft. T & M Computers may well be the next giant recognized in the field of computer software. 61. T & M Computers are conducting international business operations in world areas, which have recently undergone financial turmoil. Of the following, which organization is most likely to provide assistance in providing global financial stability? a. International Monetary Fund b. The United Nations c. The World Bank d. The Global Center for Financial Restructuring e. The World Trade Organization ANSWER: a 62. Which one of the following would T & M Computers least expect to be a negative influence from the sovereign governments within the nations where their business operations are located? a. Military hostilities b. Protectionist policies c. Promotion of economic growth and job creation d. Stiff environmental standards e. Stringent immigration policies ANSWER: c Copyright Cengage Learning. Powered by Cognero. Page 13 Name: Class: Date: Chapter 01: The Rise of Globalization63. T & M Computers plans to begin operations in areas that recently needed financial assistance and undergone certain levels of reconstruction and reorganizing to their economies. Which organization listed below is most likely to have played an integral part in this? a. The World Trade Organization b. The World Bank Group c. The International Development Association d. The International Finance Corporation e. The sovereign government of Greece ANSWER: b Scenario – The Everline Corporation The Everline Corporation is a multinational business that provides state-of-the-art digital communication capabilities to its global customers. Originally operating as a U.S. domestic business based in Duluth, Minnesota, Everline quickly seized on the opportunity provided by international expansion. Within two years, the corporation had expanded into fourteen foreign nations found throughout the Middle East, Europe, Asia, and South America. Everline understands the vital importance of offering effective and affordable communication products to its customers. It realizes the value consumers place on being able to communicate with businesses without delays or hassles. The corporation recognizes its customers need to quickly and efficiently communicate with others in the global marketplace of today. Fueled by its staff of innovative and highly skilled communication engineers, the future for Everline looks more and more promising. Communication needs around the globe continue to grow and this business stands ready to fill the demand. With net profits expected to reach one billion dollars in the next year, this company is decidedly reaping the rewards of its hard work. 64. The Everline Corporation is currently conducting its international communication business during a period of time that is experiencing rapid changes and challenges. Individuals and organizations are adjusting their lifestyles and methods of operations to fully utilize the modern communication technologies available in the marketplace. The time period Everline is currently operating under is best classed as which one of the following terms? a. Digital proliferation b. Modern communication era c. Digital divide d. Communication decade e. Digital era ANSWER: e Copyright Cengage Learning. Powered by Cognero. Page 14 Name: Class: Date: Chapter 01: The Rise of Globalization65. There is a perceived economic gap among the various foreign customers of the Everline Corporation. This is thought to be mainly the result of the level of access or lack thereof to modern digital information technologies experienced within these individual countries. Considering this perceived economic gap, Everline’s operations may be experiencing influence identified as which of the following? a. Digital stagnation b. Digital era c. Digital divide d. Bandwidth technology era e. Web revolution ANSWER: c 66. The Everline Corporation’s future business plans include expanding into foreign markets where the use of mobile Web browsing is growing rapidly. Which one of the following countries would this organization be least likely to look toward to include in their future expansion plans? a. Vietnam b. Kenya c. India d. Germany e. Nigeria ANSWER: d 67. The mangers of the Everline Corporation attribute their company’s continued profitability to the idea that globalization and information technology are closely related to one another. They acknowledge that the information technology revolution has occurred almost instantaneously. Which one of the following would not be considered a benefit derived from this so-called revolution? a. Societal hierarchies have grown in number to better accommodate information technology changes. b. A more free flow of capital across national boundaries has occurred. c. Operating costs have decreased for many businesses. d. The production of goods and services has become globalized. e. The costs of communication are reduced. ANSWER: a Copyright Cengage Learning. Powered by Cognero. Page 15 Name: Class: Date: Chapter 01: The Rise of GlobalizationScenario – The Renna Company Established in 1956, the Renna Company has always maintained its operations within the boundaries of the United States. Originally based in Lexington, Kentucky, this company has now expanded operations into thirteen other U.S. states. While it’s inexpensive and efficient cooling and heating products are in high demand even in foreign markets, this company contends it has no desire for international expansion. Conducting operations strictly within the U.S. borders does not appear to have limited this company overly much. It realized net profits of two billion dollars last year and provided gainful employment for over four thousand workers. The leaders of the Renna Company realize greater profits could be attained through international expansion. However, they stand in agreement when they state, “It is not always the money that best defines the worth of an organization.” The company desire to stay true to its mission statement, which claims, “It will serve the marketplace of the United States with its superior products and provide job opportunities with a fair wage for its employees.” The Renna Company is very proud of its products and enjoys the fact they are produced and sold in the United States of America. This company truly reflects the success possible when holding to the fact that “Made in America” is still a winner. 68. Which one of the following statements is least likely to be a rationale explaining why the Renna Company staunchly desires to avoid global expansion? a. Globalization can create a wearing away of old industries. b. Globalization brings into play the concept of sustainable development. c. Globalization can contribute to an increase in environmental degradation. d. Global expansion often leads to greater integration and interdependence among economies and societies, which can bring about injustices. e. Economic change comes with a high price tag including job losses and wages that become stagnant. ANSWER: b 69. All of the following are examples of counterarguments the Renna Company should consider before continuing with their stand of keeping their operations strictly within the borders of the United States except which one? a. Global expansion affords a strong potential for costs of both product production and product purchase to decrease. b. Life expectancy may increase for members of the population within the nations involved in globalization due to the increased quality of life. c. Globalization contributes to faster economic growth for the nations involved. d. The quality of life is most likely to improve for the citizens of the nations that are involved with globalization and trade. e. The wage levels of each nation may become stagnant and some workers may become displaced, having been replaced by less expensive foreign labor. ANSWER: e Copyright Cengage Learning. Powered by Cognero. Page 16 Name: Class: Date: Chapter 01: The Rise of Globalization70. The Renna Company has a clear understanding of the benefits of economic development. Economic development which meets the needs of the present generation without compromising the ability of future generations to meet their own needs, whether environmentally, socially or economically is best identified as which one of the following? a. Sustainable development b. Reform process c. Trade liberalization d. Corporate social responsibility e. Environmental degradation ANSWER: a Copyright Cengage Learning. Powered by Cognero. Page 17 Name: Class: Date: Chapter 01: The Rise of Globalization1. The growth trends in China and India today illustrate the impact that international business has on blue-collar and white-collar workers in wealthy countries as relatively low-skill factory jobs as well as high-skill service profession jobs migrate overseas. a. True b. False ANSWER: True 2. One way international trade benefits consumers is by providing lower living standards. a. True b. False ANSWER: False 3. It is estimated that for every billion dollars worth of exports from the United States, 100,000 domestic jobs are created. a. True b. False ANSWER: False 4. Foreign direct investment (FDI) in a country brings funds and business culture from abroad, creates new wellpaying jobs, introduces innovative technologies, and enhances the skills of domestic workers. a. True b. False ANSWER: True 5. The decoupling of world economic order and the move to a multipolar world helps explain why China is now the world's largest recipient of FDI. a. True b. False ANSWER: True 6. Singapore, a regional center for global companies, continues to attract sizable amounts of foreign investment given its strategic location, world-class infrastructure, and productive workforce. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero. Page 1 Name: Class: Date: Chapter 02: The Evolution of International Business7. Mercantilists believed that for a nation to become wealthy, that nation must export as much as possible and, in turn, import as little as possible. a. True b. False ANSWER: True 8. Factor price equalization theory, states that when factors are allowed to move freely among trading nations, efficiency increases, which leads to superior allocation of production of goods and services among countries. a. True b. False ANSWER: True 9. Porter exemplifies China as a powerhouse for consumer electronics because of the quality and quantity of its engineers, and the ability and willingness of Chinese consumers to try out new electronic products that are perfected and later exported. a. True b. False ANSWER: False 10. Porter stresses the importance of domestic demand for goods and services when determining a nation’s competitive advantage. When domestic demand remains high, the number of suppliers will also be high. a. True b. False ANSWER: True 11. Competitive industrial structures are unlikely to create innovative or dynamic firms willing to compete abroad. However, a monopolistic industry will foster innovative, cost efficient, aggressive firms that can adjust to changing economic conditions at home and will be well prepared to compete abroad. a. True b. False ANSWER: False 12. A specific tariff describes a tax on imports levied as a constant percentage of the monetary value of one unit of the imported good. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero. Page 2 Name: Class: Date: Chapter 02: The Evolution of International Business13. Under a preferential duties system, goods imported from a country outside the preferred group are subject to a higher tariff. a. True b. False ANSWER: True 14. The infant industry argument is part of the socio-economic category of managed trade. a. True b. False ANSWER: True 15. Developed countries often resort to managed trade for reasons of unethical labor practices and violation of basic human rights. a. True b. False ANSWER: True 16. The world’s two largest economies in terms of national income in the early-19th century were _____. a. China and India b. the United States and Canada c. Japan and China d. India and Japan e. the United States and Mexico ANSWER: a 17. As of 2013, was the world’s largest economy, followed by _____ and _____. a. India; the United States and China b. the United States; China and India c. Japan; China and Mexico d. India; Japan and Canada e. the United States; Mexico and Canada ANSWER: b Copyright Cengage Learning. Powered by Cognero. Page 3 Name: Class: Date: Chapter 02: The Evolution of International Business18. In the 3,000 B.C., Sumerian farmers realized that the grain surplus they produced could be used as barter for things they did not have. Therefore, the Sumerians obtained copper from Sinai Desert traders who were located several hundred miles to the west in order to make weapons and repel nomadic raiders. The Sumerians engaged in _____ a. international business b. in-border business c. environmental business d. national business e. domestic business ANSWER: a 19. The sale and purchase of goods and services across national borders is known as _____. a. exporting b. entrepreneurship c. angel investing d. importing e. trade ANSWER: e 20. Of the following statements about trade, which is NOT true? a. Trade generates jobs in both export and import sectors of an economy. b. The gains from open trade are always greater than the losses. c. Open trade and investment does create winners and losers. d. Trade does not influence culture. e. Trade is the two-way flow of exports and imports of goods and services. ANSWER: d 21. It is estimated that for every billion dollars worth of exports from the United States _____ domestic jobs are created. a. 5,000 b. 20,000 c. 100,000 d. 500,000 e. 1,000,000 ANSWER: b Copyright Cengage Learning. Powered by Cognero. Page 4 Name: Class: Date: Chapter 02: The Evolution of International Business22. Which of the following was NOT one of the top exporting nations in 2012? a. China b. Germany c. Japan d. the United Kingdom e. Hong Kong ANSWER: d 23. The corporate practice of acquiring or producing quality goods or services at a lower cost abroad thereby eliminating domestic production is called _____. a. outsourcing b. exporting c. importing d. foreign investment e. trading ANSWER: a 24. Of the following statements about foreign direct investment, which is NOT true? a. FDI in a country brings funds and business culture from abroad. b. Governments all over the world try to create a business-friendly environment to attract such investments. c. FDI creates new well-paying jobs. d. Foreign investors have little faith in high-income economies such as Canada. e. Foreign investment flows are generally based on long-term global or country outlook. ANSWER: d 25. Which of the following would NOT be considered a factor of production? a. labor b. capital c. technology d. trade e. land ANSWER: d Copyright Cengage Learning. Powered by Cognero. Page 5 Name: Class: Date: Chapter 02: The Evolution of International Business26. The oldest form of trade theory is called _____. a. mercantilism b. factor equalization c. Machiavellianism d. absolute advantage e. comparative advantage ANSWER: a 27. Which would a mercantilist value the MOST? a. labor b. a trade surplus c. absolute advantage d. a trade deficit e. factor endowments ANSWER: b 28. Of the following statements about mercantilism, which is NOT true? a. It was practiced as Europe emerged from the feudal systems of the Middle Ages and moved toward nationalism b. Mercantilists believed that for a nation to become wealthy, that nation must export as much as possible and, in turn, import as little as possible. c. During the time it was practiced, wealth was largely determined by the amount of land one had access to. d. Mercantilists did not want, or care, to see the big picture. e. Mercantilists encouraged their people to produce large families. ANSWER: c 29. During the mid-18th century, British economist ________, who came to be known as the father of free market and open trade systems, recognized the absurdity of Mercantilism. a. Bertil Ohlin b. Eli Heckscher c. Adam Smith d. Henry Ford e. John Locke ANSWER: c Copyright Cengage Learning. Powered by Cognero. Page 6 Name: Class: Date: Chapter 02: The Evolution of International Business30. Assume that because of soil and climatic conditions, Brazil is more efficient in the production of coffee than the United States. At the same time, the United States is more efficient in the production of apples than Brazil. Each of these countries can be said to have a(n) _____. a. absolute advantage b. comparative advantage c. factor endowment destruction in land d. bartering disadvantage e. mercantile disadvantage ANSWER: a 31. The ability of one country that has an absolute advantage in the production of two or more goods (or services) to produce one of them relatively more efficiently than the other is called a(n) _____. a. opportunity cost b. comparative advantage c. factor price d. factor endowment e. advantage of specialization ANSWER: b 32. The key assumptions for the H-O theory to work are: (1) perfect immobility of factors of production among countries; and (2) _____. a. perfect competition in the workplace b. superior allocation of production of goods and services c. very small labor force d. the existence of a trade surplus e. the acceleration of a trade deficit ANSWER: a 33. The _____ states that when factors are allowed to move freely among trading nations, efficiency increases, which leads to price of factors becoming equal among countries. a. factor-price equalization theory b. diamond theory c. trade policy theory d. managed trade theory e. trade deficit theory ANSWER: a Copyright Cengage Learning. Powered by Cognero. Page 7 Name: Class: Date: Chapter 02: The Evolution of International Business34. Both the theory of comparative advantage in production and the H-O theory provide ______ as a basis for international trade. a. factor endowments b. trade surplus theory c. foreign direct investment d. managed trade theory e. trade deficit theory ANSWER: a 35. How does Porter’s model of national competitive advantage differ from the Heckscher-Ohlin theory? a. It looks more closely at the quality of factor endowments. b. It examines only a country’s imports. c. It examines only a country’s exports. d. It does not encourage trade. e. It does not explain why there are “winners” and “losers” in international trade. ANSWER: a 36. According to Porter's "diamond" model, the success or competitive advantage of a nation at the global stage depends upon the interaction of all of the following EXCEPT a. firm strategy, structure, and rivalry. b. related and supporting industries. c. demand conditions. d. a conservative political structure. e. factor conditions. ANSWER: d 37. Until January 1, 2012, the price for ethanol consumers in the United States was higher than world free-market price by $0.54 per gallon because of the $0.54 per gallon tariff imposed by the U.S. government on ethanol imports. This is an example of a(n) _____ tariff. a. custom b. ad valorem c. specific d. preferential e. generalized ANSWER: c Copyright Cengage Learning. Powered by Cognero. Page 8 Name: Class: Date: Chapter 02: The Evolution of International Business38. Taxes on imports that are collected by a designated government agency responsible for regulating imports are called _____. a. custom duties b. ad valorem tariffs c. specific tariffs d. preferential tariffs e. generalized tariffs ANSWER: a 39. An agreement where a large number of developed counties permit duty-free imports of a selected list of products that originate from specific countries is known as _____. a. a custom duty b. an ad valorem agreement c. an export agreement d. the generalized system of preferences e. an import agreement ANSWER: d 40. The U.S. government may require that apparel imported into the United States should use U.S. cotton, or use a certain amount of American labor. This is an example of a(n) _____. a. quantitative restrictions b. qualitative restrictions c. domestic content import d. voluntary export restriction e. domestic content provision ANSWER: e 41. _____ refers to agreements, sometimes temporary, between countries (or a group of countries) that aim at achieving certain trade outcomes. a. Quantitative agreements b. Qualitative agreements c. Managed trade agreements d. Voluntary export agreements e. Domestic content provision agreements ANSWER: c Copyright Cengage Learning. Powered by Cognero. Page 9 Name: Class: Date: Chapter 02: The Evolution of International Business42. Suppose the United States exports automobiles to Saudi Arabia and agrees to import a corresponding value of oil from Saudi Arabia. This is an example of a. a trade deficit. b. the infant industry argument. c. countertrade. d. a domestic content provision. e. an export cartel. ANSWER: c 43. Someone who believes in the infant industry argument would be MOST likely to support ______ for a new industry. a. high tariffs b. illegal trade c. an export cartel d. an embargo e. domestic content provisions ANSWER: a 44. Of the following, which is NOT in the geo-political category of managed trade? a. Ethics and safety b. National security c. Strategic industries d. Embargoes e. Protection of critical industries ANSWER: a 45. The United States, the European Union, and Australia imposed various trade sanctions on _____ because of that country's annexation of Crimea and military actin in east Ukraine. a. Poland b. Bulgaria c. Turkey d. Uzbekistan e. Russia ANSWER: e 46. The two-way flow of exports and imports of goods is called ______. ANSWER: trade Copyright Cengage Learning. Powered by Cognero. Page 10 Name: Class: Date: Chapter 02: The Evolution of International Business47. Mercantilism refers to a theory of international trade that supports the premise that a nation could only gain from trade if it had a trade ______. ANSWER: surplus 48. When the value of ______ exceeds the value of ______, this refers to trade surplus. ANSWER: exports; imports 49. The ability of one country that has an absolute advantage in the production of two or more goods (or services) to produce one of them relatively more efficiently than the other refers to ______. ANSWER: comparative advantage 50. ______ refers to an external shock or development that could drastically change or hasten the course of economic development. ANSWER: Chance 51. ______ refers to a negative tariff or tax aimed at boosting exports. ANSWER: Export subsidy 52. _______ refers to regulations that limit the amount or number of units of products that can be imported to a country. ANSWER: Import quotas 53. Regulations requiring that a certain percentage of the value of import be sourced domestically refers to _______. ANSWER: domestic content provisions 54. Agreement in which an exporter of goods or services to another country commits to import goods or services of corresponding value from that country is called ______. ANSWER: countertrade 55. The _______ objective is to sacrifice some economic efficiency for the greater good of the country in terms of national security, protection of critical industries, and international commerce. ANSWER: geopolitical 56. Defend the following statement: Trade and foreign investment are good for society. ANSWER: Student answers will vary. 57. Explain why mercantilism fell out of favor as a theory of international trade. ANSWER: Student answers will vary. Copyright Cengage Learning. Powered by Cognero. Page 11 Name: Class: Date: Chapter 02: The Evolution of International Business58. Differentiate between H-O theory and factor price equalization theory. ANSWER: Student answers will vary. 59. Explain Porter’s “Diamond” model of national competitive advantage. ANSWER: Student answers will vary. 60. Defend the infant industry argument, using specific examples. ANSWER: Student answers will vary. Scenario – Power Trip Unlimited, LLC Is it hurricane season? Is there a tsunami warning? Did an earthquake take place somewhere in the world? While these are not pleasant questions to ask, the Miami, Florida-based business Power Trip Unlimited needs to be ready to quickly respond to such events. This unique company offers a vast line of emergency generators and supplies to help individuals caught in the devastation these types of natural occurrences can create. Staffed by experts in the generator field, Power Tripp Unlimited has assisted numerous people begin the recovery process in the aftermath of a calamity. In the past year alone, sales for this company have surpassed every goal that was set. This financial boom occurred while the company conducted sales only in the U.S. market. Power Trip’s management team now realizes that foreign markets such as India and China offer incredible opportunities for the company. Both foreign nations desire to engage in trade with the company in exchange for allowing its products to be introduced within their borders. India and China have agreed to supply Power Trip with several necessary components for its generators in exchange for allowing the company free operations inside their national boundaries. Power Trip realizes there are numerous challenges facing the company in the foreign market arena. But guided by the belief in the expertise of its staff and the quality of its products, it is ready to face any challenges foreign markets put in front of them. This company stands eagerly poised awaiting its first international sale. 61. The agreement between Power Trip Unlimited, China, and India to engage in foreign trade will ultimately provide greater opportunities for consumers of Power Trip’s products. Which one of the following is least likely to be considered a benefit of this trade agreement? a. Consumer choices may be limited by government restrictions on the operational capacity of the various products. b. There will be a greater amount of choice for consumers. c. Consumers may be offered a lower price on the goods. d. Consumers will be afforded a higher living standard. e. Consumers may have greater access to the product during emergency situations ANSWER: a Copyright Cengage Learning. Powered by Cognero. Page 12 Name: Class: Date: Chapter 02: The Evolution of International Business62. Which one of the following would be the least restrictive way in which India and China could impede sales of Power Trip’s products within their borders despite the agreement to allow free operations of the company within their nations’ boundaries? a. Place a tariff on the products b. Establish an ad valorem tariff for the products c. Establish a generalized system of preferences (GSP) d. Establish a very high specific tariff e. Establish stringent custom duties ANSWER: c 63. The agreement reached between Power Trip and the two foreign nations where they would sell components to Power Trip in exchange for allowing sales of its products within their borders most closely resembles which one of the following? a. Subsidizing exports b. Establishing a generalized system of preferences c. Development of a domestic content provision d. Establishment of a quantitative restriction (QR) e. Engagement in countertrade ANSWER: e Scenario – The Audrey Firm The Audrey Firm is an international trade consulting firm currently providing its services in eight foreign nations. The primary goal of this company is to prevent trade missteps from taking place between foreign nations conducting business with each other. The participating nations prefer to seek counsel with this firm before any of their actions result in major international involvement or World Trade Organization intervention. In the past, the Audrey Firm’s team of experts has handled international situations having the potential to create serious unrest between neighboring countries. Their guidance and expertise have been successful in keeping trade operating freely in several areas of the globe. The Audrey Firm is receiving an award for their exemplary service later this year in Washington D.C. 64. As one of the Audrey Firm’s more prestigious clients, OPEC, which exemplifies an export cartel, requires constant overseeing to ensure it complies with the agreement arranged for export cartels. Which one of the following items is least likely to appear on this type of agreement? a. Substitutes for the goods being offered must not be available b. Demand for the product in question must be elastic c. There needs to be a strong demand for the product in question at basically any price d. There must be no cheating on the stated agreement by the agreeing members e. Inelasticity in the demand for the product being offered must exist ANSWER: b Copyright Cengage Learning. Powered by Cognero. Page 13 Name: Class: Date: Chapter 02: The Evolution of International Business65. Many of the clients engaging the services of the Audrey Firm practice managed trade. All of the following would most likely be a practice these nations engage in when conducting trade with other nations except which one? a. Offer protection for specific companies b. Adhere to stringent guidelines concerning the use of child labor c. Pay close attention to the safety of products produced d. Embargoes are employed to punish nations engaging in offensive practices e. Strategic industries are given free rein in their trade practices ANSWER: e 66. The clients of the Audrey Firm use various techniques to restrict imports to their countries. Which one of the following assigns a fixed amount of tax for every physical unit imported? a. Import quota b. Voluntary export restraint c. Ad valorem tariff d. Specific tariff e. Domestic content provision ANSWER: d Copyright Cengage Learning. Powered by Cognero. Page 14 Name: Class: Date: Chapter 02: The Evolution of International Business1. One could argue that regional and global integration are not complements, but substitutes to economic development of a particular region. a. True b. False ANSWER: False 2. Both common markets and economic unions abolish restrictions on factor movements. a. True b. False ANSWER: True 3. The World Bank’s World Development Report (WDR), titled “Reshaping Economic Geography,” analyzes trade and regional economic integration through the lens of economic geography (i.e., market size, location, and openness to trade). The WDR concludes that positive changes within these three categories are essential for successful regional integration. a. True b. False ANSWER: True 4. The appropriate approach for countries interested in regional integration could include the following three fundamentals: start small, think global, and compensate the least fortunate. a. True b. False ANSWER: True 5. Generally, countries within trading blocs that have significantly lowered trade barriers have done better economically than others. a. True b. False ANSWER: True 6. Remote regions with small local markets which Paul Collier calls the “bottom billion,” are located in Central Asia; East, Central and West Africa; and the Pacific Islands. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero. Page 1 Name: Class: Date: Chapter 03: Regional Economic Integration7. With uncertainty surrounding the outcome of the Doha Round of trade negotiations, countries (large and small) are clamoring for bilateral or regional trade agreements to meet their specific agendas causing economists to be concerned about the prospects of creating a truly open global economic system that benefits all countries. a. True b. False ANSWER: True 8. The origins of the European Union (EU) can be traced to the creation of the North Atlantic Treaty Organization (NATO) in 1949. a. True b. False ANSWER: False 9. Through various treaties (e.g, the Treaty of Rome, Maastricht Treaty, Copenhagen Treaty, Treaty of Nice, the Lisbon Treaty), the EU is deepening and strengthening its institutional linkages; it is hoped that this will enable the EU to act as one country that will effectively compete with the U.S. a. True b. False ANSWER: True 10. All 28 EU countries are permitted to use the euro as their currency. a. True b. False ANSWER: False 11. NAFTA is a comprehensive free-trade agreement among Canada, United States, and Mexico that addresses issues ranging from protection of workers’ rights and the environment to phased reduction of tariff and non-tariff trade barriers, which were finally eliminated in 2009. a. True b. False ANSWER: True 12. ASEAN, headquartered in New Delhi, India, was established in August 1967 by five founding members: India, Malaysia, the Philippines, Singapore, and Thailand. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero. Page 2 Name: Class: Date: Chapter 03: Regional Economic Integration13. In 2003, ASEAN leaders agreed to establish an ASEAN Community based on three pillars: ASEAN Security Community; ASEAN Economic Community; and ASEAN Socio-Cultural Community. a. True b. False ANSWER: True 14. A growing ASEAN concern is the economic ascendancy of Turkey, which as a major low-cost manufacturing center, has been one of the world’s most attractive destinations for foreign direct investment. a. True b. False ANSWER: False 15. In 1969, frustrated by the lack of progress in LAFTA, Bolivia, Chile, Colombia, Ecuador, and Peru joined in creating the Andean Group, which aimed to create economic integration through reduced taxes, a common external tariff, and investment in the poorer industrial areas of their respective countries. a. True b. False ANSWER: True 16. _____ refers to the process of allowing efficient geographic distribution of business activities within and among countries. a. Regional integration b. Spatial transformations c. Free trade d. Economic integration e. Economic geography ANSWER: b 17. Three countries, X, Y, and Z are part of a member area where they have eliminated all barriers to trade such as tariffs, quotas, and non-tariff barriers like border restrictions, while at the same time keeping their own external tariffs against nonmembers. Such an area could be described as a(n) _____ area. a. regional b. spatial c. open trade d. embargo e. free trade ANSWER: e Copyright Cengage Learning. Powered by Cognero. Page 3 Name: Class: Date: Chapter 03: Regional Economic Integration18. According to the text, which of the following is the second stage of regional integration? a. A customs union b. An economic union c. A free trade area d. A common market e. A political union ANSWER: a 19. A group of states with convergent social, economic, and monetary policies is called a(n) _____. a. customs union b. economic union c. free trade area d. common market e. political union ANSWER: b 20. The union created when member countries of an economic and monetary union work closely with one another to arrive at common defense and foreign policies and behave as a single country is known as a(n) _____. a. customs union b. economic union c. free trade area d. common market e. political union ANSWER: e 21. NAFTA is in which stage of the economic integration process? a. First stage (free trade area) b. Second stage (customs union) c. Third stage (common market) d. Fourth stage (economic union) e. Fifth stage (political union) ANSWER: a Copyright Cengage Learning. Powered by Cognero. Page 4 Name: Class: Date: Chapter 03: Regional Economic Integration22. Of the following, which is NOT a cost of regional integration? a. Moving away from most-favored-nation status rule b. Disregarding cultural and social differences c. Losing some national sovereignty d. Reducing the powers of the national government e. Enhancing the flow of capital, labor, and technology ANSWER: e 23. The World Bank’s (2009) World Development Report concludes that successful regional integration depends on positive changes within a. comparative and absolute advantage. b. market size, location, and openness to trade. c. government control over the economy. d. the relationship between employers and employees. e. regional integration blocs. ANSWER: b 24. All of the following statements about regional integration are true EXCEPT: a. regional integration should initially address a broad, ill-defined area of cooperation. b. regional integration should not create unconnected or isolated countries. c. regional integration should compensate the least fortunate. d. regional integration has advantages and disadvantages. e. regional integration may reduce the powers of the national government. ANSWER: a 25. When the various regional integration blocs are analyzed from an economic geography perspective, they fall under three general categories – regional blocs close to major world markets, remote regions with large local markets, or _____. a. urban regions with small local markets b. urban regions with large local markets c. urban regions with no local markets d. remote regions with small local markets e. remote regions with no local markets ANSWER: d Copyright Cengage Learning. Powered by Cognero. Page 5 Name: Class: Date: Chapter 03: Regional Economic Integration26. According to the text, which of the following is NOT a regional bloc close to world markets? a. Guatemala b. Chile c. Russia d. Singapore e. Vietnam ANSWER: c 27. Of the following statements about regional blocs close to major world markets, which is NOT true? a. The ASEAN is intensifying its free trade relations with the huge markets in China. b. India, Japan, and South Korea play an important role in the SAARC. c. Access to markets is essential for economic growth. d. The oil-rich regional economy of the Middle East and North Africa has been growing fast and creating jobs for its population. e. Countries close to major markets have the advantage of connecting to suppliers and ideas. ANSWER: d 28. The members of the Maghreb Union a. all have similar political and economic systems. b. hope to form an economic and political union in North Africa. c. all suffer under enormous amounts of debt. d. are losing their competitiveness against EU countries. e. have been unable to attract much foreign investment. ANSWER: b 29. Of the following, which is NOT a primary reason why countries are now seeking to pursue regional integration at the expense of multilateral trade liberalization? a. Uncertainty surrounding the Doha Round b. Concern that the prospect of creating a truly open global economic system that benefits all countries may recede c. Some governments may initiate regional pacts d. Some countries are clamoring for bilateral or regional trade agreements to meet their specific agendas e. NAFTA is pushing the EU to pursue regional integration ANSWER: e Copyright Cengage Learning. Powered by Cognero. Page 6 Name: Class: Date: Chapter 03: Regional Economic Integration30. In which country is the EU headquartered? a. Belgium b. France c. Germany d. Italy e. Turkey ANSWER: a 31. All of the following statements about the EU are true EXCEPT: a. it is headquartered in Brussels. b. it is the most highly evolved example of regional integration in the world. c. its founding members consisted of ten countries. d. its origins can be traced to the creation of the European Coal and Steel Community. e. its eastward enlargement reflects a common past. ANSWER: c 32. The newest member of the EU is _____. a. Bulgaria b. Malta c. Russia d. Turkey e. Croatia ANSWER: e 33. Of the following statements regarding the euro, which is NOT true? a. The U.K., Denmark, and Sweden use the euro as their currency. b. The euro was introduced on January 1, 1999. c. Eighteen of the 28 EU countries are permitted to use the euro as their currency. d. The euro was considered the crowning success of the EU’s plans to integrate European economies. e. The European Central Bank is the apex central bank for the Eurozone countries. ANSWER: a Copyright Cengage Learning. Powered by Cognero. Page 7 Name: Class: Date: Chapter 03: Regional Economic Integration34. Which of the following is NOT an objective of NAFTA? a. The expansion of the trade in goods and services b. The phased elimination of all trade barriers c. Protection of intellectual property rights d. The creation of a uniform currency in North America e. The creation of institutions to address potential problems ANSWER: d 35. In which country is ASEAN headquartered? a. Indonesia b. Vietnam c. Canada d. Japan e. India ANSWER: a 36. ASEAN’s current membership stands at how many countries? a. 5 b. 10 c. 2 d. 25 e. 30 ANSWER: b 37. What is the goal of the ASEAN Security Community (ASC)? a. To ensure that countries in the region live in peace with one another b. To come to the aid of member nations in time of war c. To ensure that the ASEAN workforce is prepared to benefit from economic integration d. To oversee the construction of roads and railways between member nations e. To use the military to ensure the free flow of goods across borders ANSWER: a Copyright Cengage Learning. Powered by Cognero. Page 8 Name: Class: Date: Chapter 03: Regional Economic Integration38. ASEAN has two main objectives: 1) to accelerate economic growth, social progress, and cultural development in the region; and 2) _____. a. to trade with NAFTA b. to promote regional peace and stability c. to cover Asian countries to use of the euro d. to create more countries in Asia e. to become a world power ANSWER: b 39. How does ASEAN differ from the EU? a. It does not call for the free movement of labor across member states. b. It maintains both tariff and non-tariff barriers among member states. c. It calls for the establishment of a single market. d. It calls for the establishment of a production base. e. It refuses to do business with non-member states. ANSWER: a 40. Investments in basic and higher education are made through the ASEAN ______ community. a. ​sociocultural b. ​security c. ​educational d. ​literacy e. ​economic ANSWER: a 41. Of the following, which is NOT true about the future of ASEAN? a. ASEAN’s Vision 2020 calls for aggressive outward-looking economic policies. b. Several bilateral Free Trade Agreements are currently being implemented. c. A growing ASEAN concern is the economic ascendancy of North Korea. d. The ASEAN-Japan Comprehension Economic Partnership agreement covers trade in goods, services, and investment and economic cooperation. e. The ASEAN Australian-New Zealand FTA was signed in February 2009. ANSWER: c Copyright Cengage Learning. Powered by Cognero. Page 9 Name: Class: Date: Chapter 03: Regional Economic Integration42. The Treaty of Montevideo created _____. a. the EU b. ASEAN c. LAFTA d. NAFTA e. MERCOSUR ANSWER: c 43. With the anticipated success of NAFTA, formal discussions to establish a Free Trade Area of the Americas began under the _____ administration. a. Obama b. Bush c. Clinton d. Reagan e. Carter ANSWER: c 44. Venezuela became a member of MERCOSUR in July 2012 and is considered a key member because of its a. low tax rates and absence of tariffs. b. large population of educated, highly skilled workers. c. vast energy resources and significant domestic market. d. high-tech economy, the most advanced in South America. e. long history of political and economic stability. ANSWER: c 45. ​As a means to push NAFTA south of Mexico, the Bush administration began free-trade talks with all of the following countries EXCEPT a. ​Costa Rica. b. ​Honduras. c. ​the Dominican Republic. d. ​Haiti. e. ​Nicaragua. ANSWER: d 46. Implementation of a multitude of economic and/or political steps by member states to increase their global competitiveness, including preferential trade access refers to _______. ANSWER: regional integration Copyright Cengage Learning. Powered by Cognero. Page 10 Name: Class: Date: Chapter 03: Regional Economic Integration47. The process of allowing efficient geographic distribution of business activities within and among countries refers to _______. ANSWER: spatial transformations 48. A(n) ________ is an area in which two or more countries agree to eliminate all barriers to trade such as tariffs, quotas, and non-tariff barriers like border restrictions, while at the same time keeping their own external tariffs (within WTO guidelines) against nonmembers. ANSWER: free-trade area 49. A group of free trade member countries that have adopted a common external tariff with nonmember countries refers to ______. ANSWER: customs union 50. A ______ (or single) market is formed when member countries of a customs union remove all barriers to allow the movement of capital and labor within the customs union. ANSWER: common 51. A(n) ________ is formed when members of a common market agree to implement common social programs and coordinated macroeconomic policies that would lead to the creation of a single regional currency and a regional apex central bank. ANSWER: economic and monetary union 52. A(n) ________ union is created when member countri