flash cards

Three #301 Exam

Question Answer
Free Market view international production should be distributed among countries according to the theory of comparative advantage
Resource transfer effects FDI brings capital, technology, and management resources
Balance of payments effects FDi can help a country to achieve a current account surples
Effects on competition and economic growth Greenfield investments increase the level of competition in a market, driving down prices and improving the welfare of consumers
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
Free trade area eliminates all barriers to the trade of goods and services among member countries
Customs Union eliminates trade barriers between member countries and adopts a common external trade policy
Economic Unions 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.
Political Union involved a central political apparatus that coordinates the economic, social and foreign policy of member states.
Trade Creation occurs when lost cost producers within the free trade area replace high cost domestic producer
Trade Diversion occur when higher cost suppliers within the free trade area replace lower cost external supplier
European Council the ultimate controlling authority within the EU
European Commission responsible for proposing EU legislation, implementing it, and monitoring compliance with EU laws by member states
European Parlianment European Parliament European Parliament debates legislation proposed by the commision and forwarded to it by the council
Cout of justice The supreme appeals court for EU law
Maastrich Treat committed the EU to adopt a single currency
Central American Trade Agreement (CAFTA) to lower trade barriers between the U.S and member
Caribbean Single Market and Economy (CSME) to lower trade barriers and harmonize Marco-economic and monetary policy between member

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