Question 1

Negotiating the North American Free Trade Agreement was relatively easy since it involved meshing two large industrial countries with a developing country.

Accepted Answer

A) True 
 B)False

Question 2

Critics of the North American Free Trade Agreement (NAFTA) feared that many Americans would migrate to Mexico to find jobs.

Accepted Answer

A) True 
 B)False

Question 3

A free trade area is like a customs union except it members adopt a common external tariff structure.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that government procurement liberalization results in the U.K.government importing automobiles from Germany,the low-cost EU manufacturer.Cost savings could result from all of the following except:

Accepted Answer

A)  Competition effect 
B)  Scale-economy effect 
C)  Protective effect 
D)  Trade effect 
A)  Competition effect 
B)  Scale-economy effect 
C)  Protective effect 
D)  Trade effect

Question 5

In terms of static economic analysis,if a customs union results in a small 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

Trade creation would occur if Canada and the United States form a free-trade area,and Canadians then import less steel from the United States while importing more steel from Japan.

Accepted Answer

A) True 
 B)False

Question 7

Under the European Union's common agricultural policy,a variable import levy equals the:

Accepted Answer

A)  Amount by which the EU's support price exceeds the world price 
B)  Amount by which the world price exceeds the EU's support price 
C)  Support price of the EU 
D)  World price 
A)  Amount by which the EU's support price exceeds the world price 
B)  Amount by which the world price exceeds the EU's support price 
C)  Support price of the EU 
D)  World price

Question 8

Which country is not a member of the European Union?

Accepted Answer

A)  Spain 
B)  Germany 
C)  France 
D)  Iceland 
A)  Spain 
B)  Germany 
C)  France 
D)  Iceland

Question 9

World welfare under a customs union

Accepted Answer

A)  Increases due to a trade creation effect 
B)  Decreases due to a trade diversion effect 
C)  Depends on the relative strength of the trade creation effect and the trade diversion effect 
D)  All of the above 
A)  Increases due to a trade creation effect 
B)  Decreases due to a trade diversion effect 
C)  Depends on the relative strength of the trade creation effect and the trade diversion effect 
D)  All of the above

Question 10

Suppose that steel from Japan faces a 20 percent tariff in France and a 25 percent tariff in Italy,while France and Italy maintain free trade between each other.France and Italy are therefore part of a (an):

Accepted Answer

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

Question 11

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 12

Relative to a regional trade agreement,a multilateral trade agreement may be more beneficial to global welfare in that it entails

Accepted Answer

A)  less trade creation 
B)  less trade diversion 
C)  more trade diversion 
D)  more trade consumption 
A)  less trade creation 
B)  less trade diversion 
C)  more trade diversion 
D)  more trade consumption

Question 13

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 creation 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 14

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 15

If the United States and Canada abolish all tariffs on each other's goods and implement a common tariff on goods imported from other countries,there occurs a (an):

Accepted Answer

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

Question 16

A long-run goal of the NAFTA members is to integrate their economies into an economic and monetary union,with common fiscal policies and monetary policies.

Accepted Answer

A) True 
 B)False

Question 17

Which organization was founded in 1957 whose objective was to create an economic union among its members?

Accepted Answer

A)  General Agreements on Tariffs and Trade 
B)  Organization of Economic Cooperation and Development 
C)  European Union 
D)  Latin American Free Trade Association 
A)  General Agreements on Tariffs and Trade 
B)  Organization of Economic Cooperation and Development 
C)  European Union 
D)  Latin American Free Trade Association

Question 18

The European Union protects its agricultural producers from import competition by the use of tariff rates that vary directly with world prices.

Accepted Answer

A) True 
 B)False

Question 19

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 20

As of 2016,18 members of the European Union had adopted further economic integration than the other members by

Accepted Answer

A)  abolishing tariff and nontariff barriers to trade among each other 
B)  adopting uniform policies on the movement of factors of production 
C)  establishing common trade policies against countries that were not members of the EU 
D)  implementing a common currency and a common monetary policy 
A)  abolishing tariff and nontariff barriers to trade among each other 
B)  adopting uniform policies on the movement of factors of production 
C)  establishing common trade policies against countries that were not members of the EU 
D)  implementing a common currency and a common monetary policy

Negotiating the North American Free Trade Agreement was relatively easy since it involved meshing two large industrial countries with a developing country.

Critics of the North American Free Trade Agreement (NAFTA) feared that many Americans would migrate to Mexico to find jobs.

A free trade area is like a customs union except it members adopt a common external tariff structure.

Suppose that government procurement liberalization results in the U.K.government importing automobiles from Germany,the low-cost EU manufacturer.Cost savings could result from all of the following except:

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

Trade creation would occur if Canada and the United States form a free-trade area,and Canadians then import less steel from the United States while importing more steel from Japan.

Under the European Union's common agricultural policy,a variable import levy equals the:

Which country is not a member of the European Union?

World welfare under a customs union

Suppose that steel from Japan faces a 20 percent tariff in France and a 25 percent tariff in Italy,while France and Italy maintain free trade between each other.France and Italy are therefore part of a (an):

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.

Relative to a regional trade agreement,a multilateral trade agreement may be more beneficial to global welfare in that it entails

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

If the United States and Canada abolish all tariffs on each other's goods and implement a common tariff on goods imported from other countries,there occurs a (an):

A long-run goal of the NAFTA members is to integrate their economies into an economic and monetary union,with common fiscal policies and monetary policies.

Which organization was founded in 1957 whose objective was to create an economic union among its members?

The European Union protects its agricultural producers from import competition by the use of tariff rates that vary directly with world prices.

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

As of 2016,18 members of the European Union had adopted further economic integration than the other members by

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

Negotiating the North American Free Trade Agreement was relatively easy since it involved meshing two large industrial countries with a developing country.

Critics of the North American Free Trade Agreement (NAFTA) feared that many Americans would migrate to Mexico to find jobs.

A free trade area is like a customs union except it members adopt a common external tariff structure.

Suppose that government procurement liberalization results in the U.K.government importing automobiles from Germany,the low-cost EU manufacturer.Cost savings could result from all of the following except:

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

Trade creation would occur if Canada and the United States form a free-trade area,and Canadians then import less steel from the United States while importing more steel from Japan.

Under the European Union's common agricultural policy,a variable import levy equals the:

Which country is not a member of the European Union?

World welfare under a customs union

Suppose that steel from Japan faces a 20 percent tariff in France and a 25 percent tariff in Italy,while France and Italy maintain free trade between each other.France and Italy are therefore part of a (an):

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.

Relative to a regional trade agreement,a multilateral trade agreement may be more beneficial to global welfare in that it entails

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

If the United States and Canada abolish all tariffs on each other's goods and implement a common tariff on goods imported from other countries,there occurs a (an):

A long-run goal of the NAFTA members is to integrate their economies into an economic and monetary union,with common fiscal policies and monetary policies.

Which organization was founded in 1957 whose objective was to create an economic union among its members?

The European Union protects its agricultural producers from import competition by the use of tariff rates that vary directly with world prices.

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

As of 2016,18 members of the European Union had adopted further economic integration than the other members by

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