Exam 8: Regional Trading Arrangements

Government procurement liberalization permits a country to realize cost savings resulting from the trade effect, competition effect, and economies-of-scale effect.

When the United States was considering joining NAFTA, many economists predicted that the U.S.factor of production that would be most harmed was

Which of the following represents the stage where economic integration is least complete?

Suppose that the United Kingdom and Italy abolish all tariffs on each other's goods and all restrictions on movements of factors of production between them.They also implement a common protectionist policy toward other countries.This is an example of a (an)

The figure below depicts the steel market for Portugal, a small nation that is unable to affect the world price. Assume that Germany and France can supply steel to Portugal at a price of $200 and $300, respectively. Figure 8.2. Portugal's Steel Market -Consider Figure 8.2.With free trade, Portugal will

Luxembourg is NOT a member of

The gains from having an optimum currency include

To protect its farmers from foreign competition, the European Union has utilized variable import levies and export subsidies.

The theory of optimal currency areas concludes that for a currency area to have the best chance of success

The common agriculture policy of the European Union has supported European farmers via

For the United States, the political debate of joining NAFTA was very intense because of Mexico's

Regarding a common market, which of the following is true?

The formation of the European Monetary Union is expected to entail benefits for member countries which include all of the following EXCEPT

In terms of static economic analysis, if a customs union results in a small amount of trade creation relative to trade diversion, world welfare

Trade creation would occur if Canada and the United States form a free trade area and the Canadians then import less steel from the United States while importing more steel from Japan.

Figure 8.1 depicts the supply and demand schedules of calculators for Greece, a "small" country that is unable to affect the world price. Greece's supply and demand schedules of calculators are respectively depicted by SG and DG. Assume that Greece imports calculators from either Germany or France. Suppose Germany is the world's low-cost producer who can supply calculators to Greece at $20 per unit, while France can supply calculators at $30 per unit. Figure 8.1. Effects of a Customs Union -According to Figure 8.1, the formation of a Greece/Germany customs union would result in

A free trade area and a customs union differ in the way in which member nations treat imports from nonmember nations.

A common market

If the United Kingdom and Italy eliminate all tariffs on each other's goods and all restrictions to factor movements between them and if they implement a uniform system of import restrictions against the rest of the world, these countries have formed a common market.

Which nation is NOT a member of the North American Free Trade Association?