Exam 8: Regional Trading Arrangements

Who were the losers in the United States as a result of the North American Free Trade Agreement?

Suppose that Mexico and Canada form a free trade area, and Canada begins importing steel from Mexico rather than from Germany.There occurs

Trade creation occurs when imports from a low-cost supplier outside of a customs union are replaced by purchases from a higher-cost supplier within the union.

When the formation of a free trade area results in the reduction of trade with nonmember nations in favor of member countries, _____________ occurs.

Which economic integration scheme is solely intended to abolish trade restrictions among member countries, while setting up common tariffs against nonmembers?

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 -Consider Figure 8.1.Assume Greece levies a per-unit tariff of $20 on imports from both Germany and France. Greece will import

All welfare effects of a regional trading agreement are static.

When products from high-cost suppliers within a customs union replace imports from a low-cost nation that is NOT a member of the customs union, there exist(s)

Which form of economic integration occurs when participating countries abolish tariffs on trade among themselves, establish a common tariff on imports from nonmembers, and permit free movement of capital and labor within the organization?

A dynamic welfare gain resulting from the formation of the European Union would be

When a group of countries establish a free trade area, they achieve the highest stage of economic integration.

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

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 the United States.As a result, Canada realizes

The United States serves as an example of

NAFTA is essentially a

Economic integration is the process of eliminating restrictions on international trade, payments, and factor mobility.

Under the common agricultural policy, exports of any surplus quantities of European Union produce are encouraged through the usage of

By joining the North American Free Trade Agreement, the United States, Canada, and Mexico would find their short-run welfare decreasing because of the

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 -Consider Figure 8.1.Suppose Greece had formed a customs union with Germany rather than France.The value of the trade diversion effect would be

Under the variable levy system of the European Union, EU farmers are protected against import competition by tariffs that vary inversely with the world price.