Question 1

By removing discriminatory government procurement laws within the European Union, member nations hoped to benefit from all of the following EXCEPT

Accepted Answer

A)  EU governments could purchase from the cheapest foreign suppliers. 
B)  increased competition occurs as domestic firms compete with foreign firms previously shut out of the domestic market. 
C)  industries are restructured which permits surviving firms to achieve economies of scale. 
D)  agricultural prices fall as more farmers are allowed to produce their commodities. 
A)  EU governments could purchase from the cheapest foreign suppliers. 
B)  increased competition occurs as domestic firms compete with foreign firms previously shut out of the domestic market. 
C)  industries are restructured which permits surviving firms to achieve economies of scale. 
D)  agricultural prices fall as more farmers are allowed to produce their commodities.

Question 2

Forming a free trade agreement with the United States provided Canadian producers a danger and an opportunity.The danger was that U.S.producers might be more price competitive than Canadian producers; the opportunity was that longer production runs for Canadian producers, made possible by a free trade agreement, would result in cost reductions that would be due to economies of scale.

Accepted Answer

A) True 
 B)False

Question 3

The potential for trade diversion is smaller when a custom union's external tariff is lower rather than higher.

Accepted Answer

A) True 
 B)False

Question 4

World welfare under a customs union

Accepted Answer

A)  increases because of a trade creation effect. 
B)  increases because of a trade diversion effect. 
C)  is not affected by the trade creation and the trade diversion effects. 
D)  decreases because of a trade creation effect. 
A)  increases because of a trade creation effect. 
B)  increases because of a trade diversion effect. 
C)  is not affected by the trade creation and the trade diversion effects. 
D)  decreases because of a trade creation effect.

By removing discriminatory government procurement laws within the European Union, member nations hoped to benefit from all of the following EXCEPT

The potential for trade diversion is smaller when a custom union's external tariff is lower rather than higher.

World welfare under a customs union

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

By removing discriminatory government procurement laws within the European Union, member nations hoped to benefit from all of the following EXCEPT

The potential for trade diversion is smaller when a custom union's external tariff is lower rather than higher.

World welfare under a customs union

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