Question 1

Which country is NOT a member of the European Union?

Accepted Answer

A)  Spain 
B)  Germany 
C)  France 
D)  Iceland 
A)  Spain 
B)  Germany 
C)  France 
D)  Iceland

Question 2

The common agricultural policy of the European Union has

Accepted Answer

A)  increased American farm exports to the EU. 
B)  decreased American farm exports to the EU. 
C)  lowered the price of American farm exports to the EU. 
D)  not affected the price of American farm exports to the EU. 
A)  increased American farm exports to the EU. 
B)  decreased American farm exports to the EU. 
C)  lowered the price of American farm exports to the EU. 
D)  not affected the price of American farm exports to the EU.

Question 3

The implementation of a common market involves all of the following EXCEPT

Accepted Answer

A)  elimination of trade restrictions among member countries. 
B)  a common tax system and monetary union. 
C)  prohibition of restrictions on factor movements. 
D)  a common tariff levied on imports from nonmembers. 
A)  elimination of trade restrictions among member countries. 
B)  a common tax system and monetary union. 
C)  prohibition of restrictions on factor movements. 
D)  a common tariff levied on imports from nonmembers.

Question 4

The European Union has achieved all of the following EXCEPT

Accepted Answer

A)  adopted a common fiscal policy for member nations. 
B)  established a common system of agricultural price supports. 
C)  disbanded all tariffs among its member countries. 
D)  levied common tariffs on products imported from nonmembers. 
A)  adopted a common fiscal policy for member nations. 
B)  established a common system of agricultural price supports. 
C)  disbanded all tariffs among its member countries. 
D)  levied common tariffs on products imported from nonmembers.

Question 5

The formation of a regional trading bloc results in trade creation if

Accepted Answer

A)  inefficient domestic production is replaced by more efficient production from another member country. 
B)  inefficient domestic production is replaced by more efficient production from a nonmember country. 
C)  member countries import more but export less to nonmember countries. 
D)  member countries export less but import more from nonmember countries. 
A)  inefficient domestic production is replaced by more efficient production from another member country. 
B)  inefficient domestic production is replaced by more efficient production from a nonmember country. 
C)  member countries import more but export less to nonmember countries. 
D)  member countries export less but import more from nonmember countries.

Question 6

The European Union is primarily intended to permit

Accepted Answer

A)  countries to adopt scientific tariffs on imports. 
B)  an agricultural commodity cartel within the group. 
C)  the adoption of export tariffs for revenue purposes. 
D)  free movement of resources and products among member nations. 
A)  countries to adopt scientific tariffs on imports. 
B)  an agricultural commodity cartel within the group. 
C)  the adoption of export tariffs for revenue purposes. 
D)  free movement of resources and products among member nations.

Question 7

Which device has the European Union used to equalize farm-product import prices with politically determined European Union prices, regardless of shifts in world prices?

Accepted Answer

A)  variable levies 
B)  import quotas 
C)  import subsidies 
D)  domestic content regulations 
A)  variable levies 
B)  import quotas 
C)  import subsidies 
D)  domestic content regulations

Question 8

Before joining the North American Free Trade Agreement in 1994, Mexico adopted essentially a free trade policy toward Canada and the United States.

Accepted Answer

A) True 
 B)False

Question 9

Critics of the North American Free Trade Agreement maintained that it would result in manufacturing firms fleeing Mexico's stringent pollution-control policies and relocating in the United States and Canada.

Accepted Answer

A) True 
 B)False

Question 10

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.If Portugal forms a customs union with France, the resulting trade diversion effect equals $400.

Accepted Answer

A) True 
 B)False

Question 11

If the United States and Canada implement a regional trading agreement that results in the two countries eliminating trade barriers between themselves while maintaining separate trade barriers against nonmember countries, they have formed a

Accepted Answer

A)  common market. 
B)  customs union. 
C)  free trade area. 
D)  economic union. 
A)  common market. 
B)  customs union. 
C)  free trade area. 
D)  economic union.

Question 12

Under the North American Free Trade Agreement, Canada, Mexico, and the United States agreed to adopt free trade among each other but also to fully harmonize their fiscal and monetary policies.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that Canada has domestic firms that could supply its entire market for radios at a price of $50, while U.S.firms could supply radios at $40 and Mexico at $30.Suppose that Canada initially has a 50 percent tariff on imports of radios and then forms a free trade area with Mexico.As a result, Canada realizes

Accepted Answer

A)  trade creation, no trade diversion, and overall welfare gains. 
B)  trade creation, no trade diversion, and overall welfare losses. 
C)  trade diversion, no trade creation, and potential overall welfare losses. 
D)  trade diversion, trade creation, and potential overall welfare gains. 
A)  trade creation, no trade diversion, and overall welfare gains. 
B)  trade creation, no trade diversion, and overall welfare losses. 
C)  trade diversion, no trade creation, and potential overall welfare losses. 
D)  trade diversion, trade creation, and potential overall welfare gains.

Question 14

What factors influence the extent of trade creation and trade diversion?

Accepted Answer

Trade creation and diversion are influen

Question 15

If the United States and Canada abolish all tariffs on each other's goods and implement a common tariff on goods imported from other countries, there occurs a (an)

Accepted Answer

A)  free trade area. 
B)  customs union. 
C)  common market. 
D)  economic union. 
A)  free trade area. 
B)  customs union. 
C)  common market. 
D)  economic union.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

A long-run goal of the NAFTA members is to integrate their economies into an economic and monetary union with common fiscal policies and monetary policies.

Accepted Answer

A) True 
 B)False

Question 18

The North American Free Trade Association is a

Accepted Answer

A)  monetary union. 
B)  free trade area. 
C)  common market. 
D)  customs union. 
A)  monetary union. 
B)  free trade area. 
C)  common market. 
D)  customs union.

Question 19

As of 2016, 18 members of the European Union had adopted further economic integration than the other members by

Accepted Answer

A)  abolishing tariff and nontariff barriers to trade among each other. 
B)  adopting uniform policies on the movement of factors of production. 
C)  establishing common trade policies against countries that were not members of the EU. 
D)  implementing a common currency and a common monetary policy. 
A)  abolishing tariff and nontariff barriers to trade among each other. 
B)  adopting uniform policies on the movement of factors of production. 
C)  establishing common trade policies against countries that were not members of the EU. 
D)  implementing a common currency and a common monetary policy.

Question 20

Trade creation and trade diversion refer to the short-run (static) effects of economic integration, while economies of scale, stimulus to investment, and effects on competition refer to the long-run (dynamic) effects.

Accepted Answer

A) True 
 B)False

Which country is NOT a member of the European Union?

The common agricultural policy of the European Union has

The implementation of a common market involves all of the following EXCEPT

The European Union has achieved all of the following EXCEPT

The formation of a regional trading bloc results in trade creation if

The European Union is primarily intended to permit

Which device has the European Union used to equalize farm-product import prices with politically determined European Union prices, regardless of shifts in world prices?

Before joining the North American Free Trade Agreement in 1994, Mexico adopted essentially a free trade policy toward Canada and the United States.

Critics of the North American Free Trade Agreement maintained that it would result in manufacturing firms fleeing Mexico's stringent pollution-control policies and relocating in the United States and Canada.

If the United States and Canada implement a regional trading agreement that results in the two countries eliminating trade barriers between themselves while maintaining separate trade barriers against nonmember countries, they have formed a

Under the North American Free Trade Agreement, Canada, Mexico, and the United States agreed to adopt free trade among each other but also to fully harmonize their fiscal and monetary policies.

What factors influence the extent of trade creation and trade diversion?

If the United States and Canada abolish all tariffs on each other's goods and implement a common tariff on goods imported from other countries, there occurs a (an)

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

A long-run goal of the NAFTA members is to integrate their economies into an economic and monetary union with common fiscal policies and monetary policies.

The North American Free Trade Association is a

As of 2016, 18 members of the European Union had adopted further economic integration than the other members by

Trade creation and trade diversion refer to the short-run (static) effects of economic integration, while economies of scale, stimulus to investment, and effects on competition refer to the long-run (dynamic) effects.

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters

Exam 8: Regional Trading Arrangements

Which country is NOT a member of the European Union?

The common agricultural policy of the European Union has

The implementation of a common market involves all of the following EXCEPT

The European Union has achieved all of the following EXCEPT

The formation of a regional trading bloc results in trade creation if

The European Union is primarily intended to permit

Which device has the European Union used to equalize farm-product import prices with politically determined European Union prices, regardless of shifts in world prices?

Before joining the North American Free Trade Agreement in 1994, Mexico adopted essentially a free trade policy toward Canada and the United States.

Critics of the North American Free Trade Agreement maintained that it would result in manufacturing firms fleeing Mexico's stringent pollution-control policies and relocating in the United States and Canada.

If the United States and Canada implement a regional trading agreement that results in the two countries eliminating trade barriers between themselves while maintaining separate trade barriers against nonmember countries, they have formed a

Under the North American Free Trade Agreement, Canada, Mexico, and the United States agreed to adopt free trade among each other but also to fully harmonize their fiscal and monetary policies.

What factors influence the extent of trade creation and trade diversion?

If the United States and Canada abolish all tariffs on each other's goods and implement a common tariff on goods imported from other countries, there occurs a (an)

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

A long-run goal of the NAFTA members is to integrate their economies into an economic and monetary union with common fiscal policies and monetary policies.

The North American Free Trade Association is a

As of 2016, 18 members of the European Union had adopted further economic integration than the other members by

Trade creation and trade diversion refer to the short-run (static) effects of economic integration, while economies of scale, stimulus to investment, and effects on competition refer to the long-run (dynamic) effects.

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters