Question 1

The North American Free-Trade Agreement was most strongly opposed by U.S.:

Accepted Answer

A)  Electronics manufacturers 
B)  Labor unions 
C)  Commercial banks 
D)  Engineering companies 
A)  Electronics manufacturers 
B)  Labor unions 
C)  Commercial banks 
D)  Engineering companies

Question 2

Under NAFTA,Canada,Mexico,and the United States agreed to adopt free trade among each other,but also to fully harmonize their fiscal and monetary policies.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following organizations is considered a regional trading arrangement?

Accepted Answer

A)  Organization of Petroleum Exporting Countries 
B)  North Atlantic Treaty Organization 
C)  Benelux 
D)  International Tin Agreement 
A)  Organization of Petroleum Exporting Countries 
B)  North Atlantic Treaty Organization 
C)  Benelux 
D)  International Tin Agreement

Question 4

Following World War II,Western European nations suffered from balance-of-payments deficits due to reconstruction.

Accepted Answer

A) True 
 B)False

Question 5

In the United States,which group was most likely to be hurt by the North American Free Trade Agreement?

Accepted Answer

A)  Unskilled labor 
B)  Skilled labor 
C)  Owners of capital equipment 
D)  Owners of financial capital 
A)  Unskilled labor 
B)  Skilled labor 
C)  Owners of capital equipment 
D)  Owners of financial capital

Question 6

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 7

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 8

A free-trade area is an association of trading countries whose members agree to remove all trade restrictions among themselves,while each member country imposes identical trade restrictions against nonmember countries.

Accepted Answer

A) True 
 B)False

Question 9

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
  
-According to Figure 8.1,the formation of a Greece/Germany customs union would result in:

Accepted Answer

A)  $20 of trade diversion 
B)  $40 of trade diversion 
C)  $20 of trade creation 
D)  $40 of trade creation 
A)  $20 of trade diversion 
B)  $40 of trade diversion 
C)  $20 of trade creation 
D)  $40 of trade creation

Question 10

A customs union that results in a sizable amount of ______ would be beneficial to global welfare.

Accepted Answer

A)  trade creation 
B)  trade diversion 
C)  trade restrictions 
D)  trade diversification 
A)  trade creation 
B)  trade diversion 
C)  trade restrictions 
D)  trade diversification

Question 11

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 due to economies of scale.

Accepted Answer

A) True 
 B)False

Question 12

If Chile and Mexico form a free-trade agreement,the welfare of the two countries will necessarily increase.

Accepted Answer

A) True 
 B)False

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.Assume Greece levies a per-unit tariff of $20 on imports from both Germany and France.??The deadweight welfare loss to Greece,resulting from the $20 tariff,equals:

Accepted Answer

A)  $20 
B)  $40 
C)  $60 
D)  $80 
A)  $20 
B)  $40 
C)  $60 
D)  $80

Question 14

The North American Free Trade Agreement was expected to provide proportionately smaller benefits to Mexico than to the United States or Canada.

Accepted Answer

A) True 
 B)False

Question 15

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.As a result of a customs union formed with France,Portugal's overall welfare rises by $900.

Accepted Answer

A) True 
 B)False

Question 16

When products from high-cost suppliers within a customs union replace imports from a low-cost nation that is not a member of the customs union,there exist(s):

Accepted Answer

A)  Dynamic welfare losses 
B)  Dynamic welfare gains 
C)  Trade creation 
D)  Trade diversion 
A)  Dynamic welfare losses 
B)  Dynamic welfare gains 
C)  Trade creation 
D)  Trade diversion

Question 17

Economic integration is the process of eliminating restrictions on international trade,payments,and factor mobility.

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

Assume that the formation of a customs union turns out to include the lowest-cost world producer of the product in question.Which effect could not occur for the participating countries?

Accepted Answer

A)  Trade creation-production effect 
B)  Trade creation-consumption effect 
C)  Trade diversion 
D)  Scale economies and competition 
A)  Trade creation-production effect 
B)  Trade creation-consumption effect 
C)  Trade diversion 
D)  Scale economies and competition

Question 20

Which form of economic integration occurs when participating countries abolish tariffs on trade among themselves,establish a common tariff on imports from nonmembers,and permit free movement of capital and labor within the organization?

Accepted Answer

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

The North American Free-Trade Agreement was most strongly opposed by U.S.:

Under NAFTA,Canada,Mexico,and the United States agreed to adopt free trade among each other,but also to fully harmonize their fiscal and monetary policies.

Which of the following organizations is considered a regional trading arrangement?

Following World War II,Western European nations suffered from balance-of-payments deficits due to reconstruction.

In the United States,which group was most likely to be hurt by the North American Free Trade Agreement?

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

A free-trade area is an association of trading countries whose members agree to remove all trade restrictions among themselves,while each member country imposes identical trade restrictions against nonmember countries.

A customs union that results in a sizable amount of ______ would be beneficial to global welfare.

If Chile and Mexico form a free-trade agreement,the welfare of the two countries will necessarily increase.

The North American Free Trade Agreement was expected to provide proportionately smaller benefits to Mexico than to the United States or Canada.

When products from high-cost suppliers within a customs union replace imports from a low-cost nation that is not a member of the customs union,there exist(s):

Economic integration is the process of eliminating restrictions on international trade,payments,and factor mobility.

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

Assume that the formation of a customs union turns out to include the lowest-cost world producer of the product in question.Which effect could not occur for the participating countries?

Which form of economic integration occurs when participating countries abolish tariffs on trade among themselves,establish a common tariff on imports from nonmembers,and permit free movement of capital and labor within the organization?

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

Exam 8: Regional Trading Arrangements

The North American Free-Trade Agreement was most strongly opposed by U.S.:

Under NAFTA,Canada,Mexico,and the United States agreed to adopt free trade among each other,but also to fully harmonize their fiscal and monetary policies.

Which of the following organizations is considered a regional trading arrangement?

Following World War II,Western European nations suffered from balance-of-payments deficits due to reconstruction.

In the United States,which group was most likely to be hurt by the North American Free Trade Agreement?

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

A free-trade area is an association of trading countries whose members agree to remove all trade restrictions among themselves,while each member country imposes identical trade restrictions against nonmember countries.

A customs union that results in a sizable amount of ______ would be beneficial to global welfare.

If Chile and Mexico form a free-trade agreement,the welfare of the two countries will necessarily increase.

The North American Free Trade Agreement was expected to provide proportionately smaller benefits to Mexico than to the United States or Canada.

When products from high-cost suppliers within a customs union replace imports from a low-cost nation that is not a member of the customs union,there exist(s):

Economic integration is the process of eliminating restrictions on international trade,payments,and factor mobility.

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

Assume that the formation of a customs union turns out to include the lowest-cost world producer of the product in question.Which effect could not occur for the participating countries?

Which form of economic integration occurs when participating countries abolish tariffs on trade among themselves,establish a common tariff on imports from nonmembers,and permit free movement of capital and labor within the organization?

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