Question 1

A country operates with its own independent currency and allows this to float freely. If it were to experience trade deficits with its trading partners then it could, in the short run, allow its currency to depreciate.

Accepted Answer

A) True 
 B)False  False

Question 2

Elaborate on the differences between a customs union, a free trade area, a single market, a monetary union, an economic union, and the EU.

Accepted Answer

Brief description of a customs union, a free trade area, a single market, a monetary union, and an economic union.
EU moving from a customs union to a free trade area-negative to positive integration.
Description of the single market-free movement of goods, people, capital, and services.
Conclude with areas still to be tackled-liberalization of key industries from the transport sector to the services sector.

Question 3

'Trade diversion' in the European Union could be defined as:

Accepted Answer

A)  Encouraging efficient free trade between Spain and the UK 
B)  The monetary costs of that activity 
C)  Trade created by the formation of a customs union 
D)  Trade diverted from a more efficient exporter to a less efficient one through the formation of a free trade agreement D

Question 4

Critically discuss the pros and cons of the 2009 Treaty of Lisbon.

Accepted Answer

The answer of Critically discuss the pros and cons of...

Question 5

Briefly describe the principal EU institutions and how EU decision-making works.

Accepted Answer

The answer of Briefly describe the principal EU institutions and...

Question 6

Which of the following are present in a customs union?

Accepted Answer

A)  A common currency 
B)  No internal tariff or non-tariff barriers 
C)  A common external tariff 
D)  Factor and asset mobility

Question 7

In what way would a country's entry to the eurozone (i.e. adoption of the euro as its currency) benefit that country's firms?

Accepted Answer

A)  It reduces the uncertainties of exchange rate fluctuations 
B)  It reduces taxes paid to the Queen 
C)  It helps 'disguise' the short-term loss in competitiveness 
D)  Incomes are distributed equally across all people

Question 8

With reference to the three main EU institutions, where does the balance of power lie?

Accepted Answer

A)  The European Commission 
B)  The Council of Ministers 
C)  The European Parliament 
D)  The European Parliament and the European Commission

Question 9

Explain why EU decision-making can be a complex process.

Accepted Answer

The answer of Explain why EU decision-making can be a...

Question 10

Explain the different approaches to building the European Union and their impact on member states.

Accepted Answer

The answer of Explain the different approaches to building the...

Exam 13: Creating Effective Trading Blocs: What Lessons Does the European Union Provide