Question 1

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

Accepted Answer

A)  skilled labor 
B)  unskilled labor 
C)  capital 
D)  entrepreneurship 
A)  skilled labor 
B)  unskilled labor 
C)  capital 
D)  entrepreneurship

Question 2

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

Accepted Answer

A)  Canada 
B)  Greenland 
C)  Mexico 
D)  United States 
A)  Canada 
B)  Greenland 
C)  Mexico 
D)  United States

Question 3

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

Accepted Answer

A)  Trade diversion 
B)  Trade creation 
C)  Diseconomies of scale 
D)  Economies of scale 
A)  Trade diversion 
B)  Trade creation 
C)  Diseconomies of scale 
D)  Economies of scale

Question 4

Developing countries have often argued that their terms of trade have worsened because

Accepted Answer

A)  their import prices have declined relative to their export prices 
B)  their import prices have risen relative to their export prices 
C)  their import prices and export prices have increased 
D)  their import prices and export prices have decreased 
A)  their import prices have declined relative to their export prices 
B)  their import prices have risen relative to their export prices 
C)  their import prices and export prices have increased 
D)  their import prices and export prices have decreased

Question 5

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

Accepted Answer

A)  Free trade area 
B)  Monetary union 
C)  Common market 
D)  Customs union 
A)  Free trade area 
B)  Monetary union 
C)  Common market 
D)  Customs union

Question 6

Economists note that instability of prices of primary products (tin,coffee,copper) is mainly caused by

Accepted Answer

A)  low price elasticity of demand and low price elasticity of supply 
B)  low price elasticity of demand and high price elasticity of supply 
C)  high price elasticity of demand and low price elasticity of supply 
D)  high price elasticity of demand and high price elasticity of supply 
A)  low price elasticity of demand and low price elasticity of supply 
B)  low price elasticity of demand and high price elasticity of supply 
C)  high price elasticity of demand and low price elasticity of supply 
D)  high price elasticity of demand and high price elasticity of supply

Question 7

An objective of all of the members of the European Union (EU) has been to

Accepted Answer

A)  abolish tariff and nontariff barriers to trade among member countries 
B)  adopt identical fiscal policies for all countries belonging to the EU 
C)  form a customs union agreement with members of NAFTA 
D)  establish a common currency and a common monetary policy 
A)  abolish tariff and nontariff barriers to trade among member countries 
B)  adopt identical fiscal policies for all countries belonging to the EU 
C)  form a customs union agreement with members of NAFTA 
D)  establish a common currency and a common monetary policy

Question 8

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

Accepted Answer

A)  Trade devaluation 
B)  Trade revaluation 
C)  Trade creation 
D)  Trade diversion 
A)  Trade devaluation 
B)  Trade revaluation 
C)  Trade creation 
D)  Trade diversion

Question 9

Regarding the interests of a nonmember nation of a regional trading agreement:

Accepted Answer

A)  the exporting interests of the nonmember nation outweigh its import competing interests 
B)  the import competing interests of the nonmember nation outweigh its exporting interests 
C)  the nonmember nation will have a better negotiating position 
D)  the nonmember nation has no interest in the regional trading arrangement 
A)  the exporting interests of the nonmember nation outweigh its import competing interests 
B)  the import competing interests of the nonmember nation outweigh its exporting interests 
C)  the nonmember nation will have a better negotiating position 
D)  the nonmember nation has no interest in the regional trading arrangement

Question 10

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.The value of the trade diversion effect,resulting from the Greece/France customs union,equals:

Accepted Answer

A)  $5 
B)  $10 
C)  $15 
D)  $20 
A)  $5 
B)  $10 
C)  $15 
D)  $20

Question 11

The highest stage of economic integration is a monetary union.

Accepted Answer

A) True 
 B)False

Question 12

The WTO's efforts to promote trade liberalization globally:

Accepted Answer

A)  have become easier 
B)  have become more difficult 
C)  have remained stable 
D)  none of these is correct 
A)  have become easier 
B)  have become more difficult 
C)  have remained stable 
D)  none of these is correct

Question 13

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-creation effect equals $500.

Accepted Answer

A) True 
 B)False

Question 14

Suppose that Mexico and Canada form a free-trade area.Mexicans then decrease auto manufacturing and increase imports of autos from Canada,while the Canadians decrease computer production and import more computers from Mexico.This is an example of:

Accepted Answer

A)  Trade diversion 
B)  Trade creation 
C)  Trade destruction 
D)  Trade exhaustion 
A)  Trade diversion 
B)  Trade creation 
C)  Trade destruction 
D)  Trade exhaustion

Question 15

Which trade strategy have developing countries used to replace commodity exports with exports such as processed primary products,semi-manufacturers,and manufacturers?

Accepted Answer

A)  Multilateral contract 
B)  Buffer stock 
C)  Export promotion 
D)  Export quota 
A)  Multilateral contract 
B)  Buffer stock 
C)  Export promotion 
D)  Export quota

Question 16

To protect its farmers from imports of agricultural goods,the European Union has implemented tariff rates that vary directly with world prices.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Countries pursuing membership in the European Monetary Union (Eurozone) are supposed to meet "convergence criteria" which include

Accepted Answer

A)  price stability 
B)  low long-term interest rates 
C)  sound governmental finances 
D)  all of the above 
A)  price stability 
B)  low long-term interest rates 
C)  sound governmental finances 
D)  all of the above

Question 19

The mission of the ______ is to provide financial assistance to developing countries facing balance of payments deficits and financial crisis

Accepted Answer

A)  Bank for International Settlements 
B)  International Monetary Fund 
C)  World Trade Organization 
D)  World Bank 
A)  Bank for International Settlements 
B)  International Monetary Fund 
C)  World Trade Organization 
D)  World Bank

Question 20

NAFTA 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

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

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

Developing countries have often argued that their terms of trade have worsened because

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

Economists note that instability of prices of primary products (tin,coffee,copper) is mainly caused by

An objective of all of the members of the European Union (EU) has been to

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

Regarding the interests of a nonmember nation of a regional trading agreement:

The highest stage of economic integration is a monetary union.

The WTO's efforts to promote trade liberalization globally:

Suppose that Mexico and Canada form a free-trade area.Mexicans then decrease auto manufacturing and increase imports of autos from Canada,while the Canadians decrease computer production and import more computers from Mexico.This is an example of:

Which trade strategy have developing countries used to replace commodity exports with exports such as processed primary products,semi-manufacturers,and manufacturers?

To protect its farmers from imports of agricultural goods,the European Union has implemented tariff rates that vary directly with world prices.

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.

Countries pursuing membership in the European Monetary Union (Eurozone) are supposed to meet "convergence criteria" which include

The mission of the ______ is to provide financial assistance to developing countries facing balance of payments deficits and financial crisis

NAFTA is a:

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

Regional Trading Arrangements

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

Macroeconomic Policy in an Open-economy

International Banking: Reserves, Debt, and Risk

Filters

Exam 7: Trade Policies for the Developing Nations

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

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

Developing countries have often argued that their terms of trade have worsened because

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

Economists note that instability of prices of primary products (tin,coffee,copper) is mainly caused by

An objective of all of the members of the European Union (EU) has been to

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

Regarding the interests of a nonmember nation of a regional trading agreement:

The highest stage of economic integration is a monetary union.

The WTO's efforts to promote trade liberalization globally:

Suppose that Mexico and Canada form a free-trade area.Mexicans then decrease auto manufacturing and increase imports of autos from Canada,while the Canadians decrease computer production and import more computers from Mexico.This is an example of:

Which trade strategy have developing countries used to replace commodity exports with exports such as processed primary products,semi-manufacturers,and manufacturers?

To protect its farmers from imports of agricultural goods,the European Union has implemented tariff rates that vary directly with world prices.

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.

Countries pursuing membership in the European Monetary Union (Eurozone) are supposed to meet "convergence criteria" which include

The mission of the ______ is to provide financial assistance to developing countries facing balance of payments deficits and financial crisis

NAFTA is a:

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

Regional Trading Arrangements

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

Macroeconomic Policy in an Open-economy

International Banking: Reserves, Debt, and Risk

Filters