Economic Integration Test

1. What is the main difference between a Free Trade Area (FTA) and a Customs Union (CU)?

A) An FTA removes internal tariffs, while a CU does not.

B) CU members adopt a Common External Tariff (CET), while FTA members maintain independent trade
policies toward non-members.

C) A CU allows free movement of labor, while an FTA does not.

D) An FTA requires a supranational court, while a CU is based on intergovernmental agreement.

2. What is "trade diversion" according to the Vinerian paradigm?

A) Shifting production from an inefficient domestic producer to a low-cost partner within the
union.

B) When a country starts exporting to third countries instead of member states.

C) Shifting imports from a more efficient non-member producer to a less efficient member producer
due to preferential tariffs.

D) An increase in the overall efficiency of global resource allocation.

3. Which of the "four freedoms" characterizes a Common Market compared to a Customs Union?

A) Free movement of goods.

B) Common External Tariff.

C) Free movement of factors of production (labor and capital).

D) Abolition of internal quotas.

4. What does the introduction of a "Common External Tariff" (CET) solve in a Customs Union?

A) The risk of "trade deflection," where goods enter the block through the country with the lowest
tariff.

B) The problem of deflation in member states.

C) The need to implement strict rules of origin between members.

D) A lack of labor in industrial sectors.

.

5. Which African organization is mentioned as the oldest functioning customs union in the world?

A) MERCOSUR

B) ASEAN

C) GCC

D) SACU

6. What is the difference between "harmonization" and the "principle of mutual recognition"?

A) Harmonization is voluntary, while mutual recognition is mandatory.

B) Harmonization creates uniform regional rules, while mutual recognition means a product legally
sold in one country must be accepted in others.

C) Harmonization applies only to taxes, while mutual recognition applies only to safety.

D) There is no difference between these terms within a single market.

7. What characterizes the "supranational" model of decision-making used by the EU?

A) Decisions must always be made by the consensus of all member states.

B) States delegate powers to independent bodies, and union law has "direct effect" on individuals.

C) Every state has a veto on every issue.

D) International treaties must always be ratified by national parliaments before becoming valid.

8. Why is the monetary union within the Gulf Cooperation Council (GCC) facing difficulties?

A) Member states have too many different political systems.

B) Economies are structurally similar (oil dependence) and cycles are synchronized with oil prices,
not internal trade.

C) None of the GCC countries use the US dollar as a peg.

D) The document states the GCC monetary union was successfully completed in 2024.

9. What does the 2024 Letta Report propose as the "fifth freedom" for the EU Single Market?

A) Free movement of electricity.

B) Free movement of cryptocurrencies.

C) Free movement of knowledge and innovation.

D) Free movement of organic food.

10. What is the relationship between "de jure" and "de facto" sovereignty in the integration
process?

A) Nations surrender de jure sovereignty (legal power) to gain de facto sovereignty (the actual
ability to influence outcomes in a globalized world).

B) Integration increases de jure sovereignty in exchange for economic gains.

C) The document claims integration has no impact on national sovereignty.

D) De facto sovereignty disappears at the Free Trade Area stage.
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