Question 1

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

Accepted Answer

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

Question 2

Luxembourg is a member of:

Accepted Answer

A)  a free trade area 
B)  a monetary union 
C)  Benelux 
D)  Both a and c 
A)  a free trade area 
B)  a monetary union 
C)  Benelux 
D)  Both a and c D

Question 3

Over the long run,the formation of a customs union may yield welfare gains due to economies of scale,greater competition,and stimulus to investment.

Accepted Answer

A) True 
 B)False  True

Question 4

As of 2002,members of the European Monetary Union agreed to replace their currencies with the:

Accepted Answer

A)  mark 
B)  dollar 
C)  franc 
D)  euro 
A)  mark 
B)  dollar 
C)  franc 
D)  euro

Question 5

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

Accepted Answer

A)  increases 
B)  decreases 
C)  does not change 
A)  increases 
B)  decreases 
C)  does not change

Question 6

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.With free trade Portugal will

Accepted Answer

A)  import 0 tons of steel for Germany and 15 tons of steel from France at $300 per ton 
B)  import 25 tons of steel from Germany at $200 per ton and 15 tons of steel from France at $300 per ton 
C)  import 15 tons of steel from Germany at $200 per ton and 10 tons of steel from France at $200 per ton 
D)  import 25 tons of steel from Germany at $200 per ton and 0 tons from France 
A)  import 0 tons of steel for Germany and 15 tons of steel from France at $300 per ton 
B)  import 25 tons of steel from Germany at $200 per ton and 15 tons of steel from France at $300 per ton 
C)  import 15 tons of steel from Germany at $200 per ton and 10 tons of steel from France at $200 per ton 
D)  import 25 tons of steel from Germany at $200 per ton and 0 tons from France

Question 7

A main disadvantage of the European Monetary Union is that:

Accepted Answer

A)  Each member country loses the use of monetary policy as to tool to combat recession 
B)  There is a high degree of labor mobility among the member countries 
C)  Prices are highly flexible in response to changing economic conditions 
D)  Wages are highly flexible in response to changing economic conditions 
A)  Each member country loses the use of monetary policy as to tool to combat recession 
B)  There is a high degree of labor mobility among the member countries 
C)  Prices are highly flexible in response to changing economic conditions 
D)  Wages are highly flexible in response to changing economic conditions

Question 8

Some trade creation was expected to occur as a result of the U.S.-Canada free-trade agreement,since Canadian exports to the United States and U.S.exports to Canada were expected to expand at the expense of imports from Germany and Japan that faced trade restrictions.

Accepted Answer

A) True 
 B)False

Question 9

What is meant by economic integration?

Accepted Answer

The term refers to the process

Question 10

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:

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 11

The common agricultural policy of the European Union supports its farmers through a system of

Accepted Answer

A)  variable levies and export subsidies 
B)  fixed import tariffs and export subsidies 
C)  export subsidies and import quotas 
D)  domestic content requirements 
A)  variable levies and export subsidies 
B)  fixed import tariffs and export subsidies 
C)  export subsidies and import quotas 
D)  domestic content requirements

Question 12

A static welfare effect resulting from the formation of the European Union would be:

Accepted Answer

A)  Economies of scale 
B)  Trade diversion 
C)  Investment incentives 
D)  Increased competition 
A)  Economies of scale 
B)  Trade diversion 
C)  Investment incentives 
D)  Increased competition

Question 13

Customs union theory reasons that the formation of a customs union will decrease members' real welfare when the:

Accepted Answer

A)  Trade diversion effect exceeds the trade creation effect 
B)  Trade production effect exceeds the trade consumption effect 
C)  Trade consumption effect exceeds the trade production effect 
D)  Trade creation effect exceeds the trade diversion effect 
A)  Trade diversion effect exceeds the trade creation effect 
B)  Trade production effect exceeds the trade consumption effect 
C)  Trade consumption effect exceeds the trade production effect 
D)  Trade creation effect exceeds the trade diversion effect

Question 14

In the United States,the proposed North American Free Trade Agreement was generally supported by:

Accepted Answer

A)  Labor unions 
B)  Electronics firms 
C)  Environmentalists 
D)  Citrus producers 
A)  Labor unions 
B)  Electronics firms 
C)  Environmentalists 
D)  Citrus producers

Question 15

American critics of the North American Free Trade Agreement (NAFTA) thought that it could cause some U.S.companies to move to Mexico to benefit from

Accepted Answer

A)  lenient environment policies of the Mexican government 
B)  high wages of Mexican workers 
C)  low productivity of Mexican workers 
D)  high corporate tax rates of the Mexican government 
A)  lenient environment policies of the Mexican government 
B)  high wages of Mexican workers 
C)  low productivity of Mexican workers 
D)  high corporate tax rates of the Mexican government

Question 16

Advocates of the North American Free Trade Agreement (NAFTA) hoped that a rise in Mexican exports to the United States would discourage labor migration from Mexico to the United States.

Accepted Answer

A) True 
 B)False

Question 17

As new regional trading arrangements are formed,the opportunity cost of remaining outside:

Accepted Answer

A)  increases 
B)  decreases 
C)  remains stable 
D)  none of these 
A)  increases 
B)  decreases 
C)  remains stable 
D)  none of these

Question 18

It is generally agreed that completing the common market stage of integration for the European Union contributed to overall welfare losses due to trade diversion exceeding trade creation.

Accepted Answer

A) True 
 B)False

Question 19

When Mexico became a part of NAFTA,along with Canada and the United States,it:

Accepted Answer

A)  Eliminated tariffs against Canada and the United States but maintained them against nonmembers 
B)  Eliminated tariffs against Canada,the United States,and all nonmember countries 
C)  Increased tariffs against Canada the United States,and all nonmember countries 
D)  Increased tariffs against Canada and the United States,but did not change them against nonmember countries 
A)  Eliminated tariffs against Canada and the United States but maintained them against nonmembers 
B)  Eliminated tariffs against Canada,the United States,and all nonmember countries 
C)  Increased tariffs against Canada the United States,and all nonmember countries 
D)  Increased tariffs against Canada and the United States,but did not change them against nonmember countries

Question 20

The task of creating an economic union is:

Accepted Answer

A)  difficult 
B)  relatively easy 
C)  similar to creating a customs union 
D)  None of the above 
A)  difficult 
B)  relatively easy 
C)  similar to creating a customs union 
D)  None of the above

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

Luxembourg is a member of:

Over the long run,the formation of a customs union may yield welfare gains due to economies of scale,greater competition,and stimulus to investment.

As of 2002,members of the European Monetary Union agreed to replace their currencies with the:

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

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.With free trade Portugal will

A main disadvantage of the European Monetary Union is that:

Some trade creation was expected to occur as a result of the U.S.-Canada free-trade agreement,since Canadian exports to the United States and U.S.exports to Canada were expected to expand at the expense of imports from Germany and Japan that faced trade restrictions.

What is meant by economic integration?

The common agricultural policy of the European Union supports its farmers through a system of

A static welfare effect resulting from the formation of the European Union would be:

Customs union theory reasons that the formation of a customs union will decrease members' real welfare when the:

In the United States,the proposed North American Free Trade Agreement was generally supported by:

American critics of the North American Free Trade Agreement (NAFTA) thought that it could cause some U.S.companies to move to Mexico to benefit from

Advocates of the North American Free Trade Agreement (NAFTA) hoped that a rise in Mexican exports to the United States would discourage labor migration from Mexico to the United States.

As new regional trading arrangements are formed,the opportunity cost of remaining outside:

It is generally agreed that completing the common market stage of integration for the European Union contributed to overall welfare losses due to trade diversion exceeding trade creation.

When Mexico became a part of NAFTA,along with Canada and the United States,it:

The task of creating an economic union is:

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

Macroeconomic Policy in an Open-economy

International Banking: Reserves, Debt, and Risk

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Exam 8: Regional Trading Arrangements

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

Luxembourg is a member of:

Over the long run,the formation of a customs union may yield welfare gains due to economies of scale,greater competition,and stimulus to investment.

As of 2002,members of the European Monetary Union agreed to replace their currencies with the:

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

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.With free trade Portugal will

A main disadvantage of the European Monetary Union is that:

Some trade creation was expected to occur as a result of the U.S.-Canada free-trade agreement,since Canadian exports to the United States and U.S.exports to Canada were expected to expand at the expense of imports from Germany and Japan that faced trade restrictions.

What is meant by economic integration?

The common agricultural policy of the European Union supports its farmers through a system of

A static welfare effect resulting from the formation of the European Union would be:

Customs union theory reasons that the formation of a customs union will decrease members' real welfare when the:

In the United States,the proposed North American Free Trade Agreement was generally supported by:

American critics of the North American Free Trade Agreement (NAFTA) thought that it could cause some U.S.companies to move to Mexico to benefit from

Advocates of the North American Free Trade Agreement (NAFTA) hoped that a rise in Mexican exports to the United States would discourage labor migration from Mexico to the United States.

As new regional trading arrangements are formed,the opportunity cost of remaining outside:

It is generally agreed that completing the common market stage of integration for the European Union contributed to overall welfare losses due to trade diversion exceeding trade creation.

When Mexico became a part of NAFTA,along with Canada and the United States,it:

The task of creating an economic union is:

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

Macroeconomic Policy in an Open-economy

International Banking: Reserves, Debt, and Risk

Filters