International Business Chapter 9 Questions and Answers 100% Correct

International Business Chapter 9 Questions and Answers 100% Correct Regional economic integration 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 Is regional economic integration a good thing? There is some concern that the world is moving toward a situation in which a number of regional trade blocks compete against each other Free trade area all barriers to the trade of goods and services among member countries are removed, but members determine their own trade policies with regard to nonmembers Customs union eliminates trade barriers between member countries and adopts a common external trade policy Common market no barriers to trade between member countries, a common external trade policy, and the free movement of the factors of production Economic union involves the free flow of products and factors of production between members, the adoption of a common external trade policy, and in addition, a common currency, harmonization of the member countries' tax rates, and a common monetary and fiscal policy Political union independent states are combined into a single union Politically, integration is attractive because: By linking countries together, making them more dependent on each other, and forming a structure where they regularly have to interact, the likelihood of violent conflict and war will decrease By linking countries together, they have greater clout and are politically much stronger in dealing with other nations Trade creation occurs when low cost producers within the free trade area replace high cost domestic producers Trade diversion occurs when higher cost suppliers within the free trade area replace lower cost external suppliers The European Union (EU) is the result of The devastation of two world wars on Western Europe and the desire for a lasting peace The desire by the European nations to hold their own on the world's political and economic stage The European Commission proposes