Question 1

At the Maastricht Summit of 1991,members of the European Union expressed the goal of achieving the common market stage of economic integration.

Accepted Answer

A) True 
 B)False

Question 2

The EU has abolished restrictions on agricultural products traded internally.

Accepted Answer

A) True 
 B)False

Question 3

Under the common agricultural policy,exports of any surplus quantities of EU produce are encouraged through the usage of:

Accepted Answer

A)  Variable levies 
B)  Export subsidies 
C)  Import quotas 
D)  Countertrade 
A)  Variable levies 
B)  Export subsidies 
C)  Import quotas 
D)  Countertrade

Question 4

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-diversion effect equals $400.

Accepted Answer

A) True 
 B)False

Question 5

To protect its farmers from foreign competition,the European Union has utilized variable import levies and export subsidies.

Accepted Answer

A) True 
 B)False

Question 6

The European Union's variable levy is essentially a sliding-scale tariff applied to imports of agricultural products.

Accepted Answer

A) True 
 B)False

Question 7

An advantage of the European Monetary Union (Eurozone) is that its member countries have common fiscal policies.

Accepted Answer

A) True 
 B)False

Question 8

The implementation of a common market involves all of the following except:

Accepted Answer

A)  Elimination of trade restrictions among member countries 
B)  A common tax system and monetary union 
C)  Prohibition of restrictions on factor movements 
D)  A common tariff levied in imports from nonmembers 
A)  Elimination of trade restrictions among member countries 
B)  A common tax system and monetary union 
C)  Prohibition of restrictions on factor movements 
D)  A common tariff levied in imports from nonmembers

Question 9

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 had formed a customs union with Germany,Portugal's welfare would have decreased by $500.

Accepted Answer

A) True 
 B)False

Question 10

NAFTA is essentially a

Accepted Answer

A)  free trade area 
B)  customs union 
C)  economic union 
D)  monetary union 
A)  free trade area 
B)  customs union 
C)  economic union 
D)  monetary union

Question 11

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 12

American critics of the North American Free Trade Agreement (NAFTA) thought that it could

Accepted Answer

A)  cause American workers to migrate to Mexico to find jobs 
B)  cause U.S.companies to move to Mexico to benefit from lower labor costs 
C)  cause Mexican companies to move to the U.S.to benefit from higher labor productivity 
D)  cause Mexican companies to move to the U.S.to benefit from higher labor costs 
A)  cause American workers to migrate to Mexico to find jobs 
B)  cause U.S.companies to move to Mexico to benefit from lower labor costs 
C)  cause Mexican companies to move to the U.S.to benefit from higher labor productivity 
D)  cause Mexican companies to move to the U.S.to benefit from higher labor costs

Question 13

If a customs union includes the low-cost supplier of the world,there would be no adverse trade-diversion effect that would counteract the positive trade-creation effect.

Accepted Answer

A) True 
 B)False

Question 14

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)  produce 10 tons of steel,consume 35 tons of steel and import 25 tons of steel 
B)  produce 15 tons of steel,consume 30 tons of steel and import 15 tons of steel 
C)  produce 0 tons of steel,consume 35 tons of steel and import 35 tons of steel 
D)  produce 15 tons of steel,consume 35 tons of steel and import 20 tons of steel 
A)  produce 10 tons of steel,consume 35 tons of steel and import 25 tons of steel 
B)  produce 15 tons of steel,consume 30 tons of steel and import 15 tons of steel 
C)  produce 0 tons of steel,consume 35 tons of steel and import 35 tons of steel 
D)  produce 15 tons of steel,consume 35 tons of steel and import 20 tons of steel

Question 15

For countries forming a customs union,the trade-creation effect represents a welfare loss and the trade-diversion effect represents a welfare gain.

Accepted Answer

A) True 
 B)False

Question 16

The formation of the European Monetary Union is expected to entail benefits for member countries which include all of the following except:

Accepted Answer

A)  Greater certainty for investors within the EMU 
B)  Lower costs of transactions within the EMU 
C)  Independent monetary policies run by the central bank of each member country 
D)  Enhanced competition among companies in member countries 
A)  Greater certainty for investors within the EMU 
B)  Lower costs of transactions within the EMU 
C)  Independent monetary policies run by the central bank of each member country 
D)  Enhanced competition among companies in member countries

Question 17

Suppose that the United Kingdom and Italy abolish all tariffs on each other's goods and all restrictions on movements of factors of production between them.They also implement a common protectionist policy toward other countries.This is an example 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 18

All welfare consequences of a regional trading arrangement are dynamic

Accepted Answer

A) True 
 B)False

Question 19

When the United States,Canada,and Mexico form a free trade area,and Mexico begins importing a product from Canada rather than from the lowest cost world producer.

Accepted Answer

A)  Trade diversion occurs 
B)  Trade creation occurs 
C)  World welfare rises 
D)  World welfare falls to zero 
A)  Trade diversion occurs 
B)  Trade creation occurs 
C)  World welfare rises 
D)  World welfare falls to zero

Question 20

The potential for trade diversion is smaller when a custom union's external tariff is lower rather than higher.

Accepted Answer

A) True 
 B)False

At the Maastricht Summit of 1991,members of the European Union expressed the goal of achieving the common market stage of economic integration.

The EU has abolished restrictions on agricultural products traded internally.

Under the common agricultural policy,exports of any surplus quantities of EU produce are encouraged through the usage of:

To protect its farmers from foreign competition,the European Union has utilized variable import levies and export subsidies.

The European Union's variable levy is essentially a sliding-scale tariff applied to imports of agricultural products.

An advantage of the European Monetary Union (Eurozone) is that its member countries have common fiscal policies.

The implementation of a common market involves all of the following except:

NAFTA is essentially a

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

American critics of the North American Free Trade Agreement (NAFTA) thought that it could

If a customs union includes the low-cost supplier of the world,there would be no adverse trade-diversion effect that would counteract the positive trade-creation effect.

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

For countries forming a customs union,the trade-creation effect represents a welfare loss and the trade-diversion effect represents a welfare gain.

The formation of the European Monetary Union is expected to entail benefits for member countries which include all of the following except:

Suppose that the United Kingdom and Italy abolish all tariffs on each other's goods and all restrictions on movements of factors of production between them.They also implement a common protectionist policy toward other countries.This is an example of a (an):

All welfare consequences of a regional trading arrangement are dynamic

When the United States,Canada,and Mexico form a free trade area,and Mexico begins importing a product from Canada rather than from the lowest cost world producer.

The potential for trade diversion is smaller when a custom union's external tariff is lower rather than higher.

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

At the Maastricht Summit of 1991,members of the European Union expressed the goal of achieving the common market stage of economic integration.

The EU has abolished restrictions on agricultural products traded internally.

Under the common agricultural policy,exports of any surplus quantities of EU produce are encouraged through the usage of:

To protect its farmers from foreign competition,the European Union has utilized variable import levies and export subsidies.

The European Union's variable levy is essentially a sliding-scale tariff applied to imports of agricultural products.

An advantage of the European Monetary Union (Eurozone) is that its member countries have common fiscal policies.

The implementation of a common market involves all of the following except:

NAFTA is essentially a

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

American critics of the North American Free Trade Agreement (NAFTA) thought that it could

If a customs union includes the low-cost supplier of the world,there would be no adverse trade-diversion effect that would counteract the positive trade-creation effect.

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

For countries forming a customs union,the trade-creation effect represents a welfare loss and the trade-diversion effect represents a welfare gain.

The formation of the European Monetary Union is expected to entail benefits for member countries which include all of the following except:

Suppose that the United Kingdom and Italy abolish all tariffs on each other's goods and all restrictions on movements of factors of production between them.They also implement a common protectionist policy toward other countries.This is an example of a (an):

All welfare consequences of a regional trading arrangement are dynamic

When the United States,Canada,and Mexico form a free trade area,and Mexico begins importing a product from Canada rather than from the lowest cost world producer.

The potential for trade diversion is smaller when a custom union's external tariff is lower rather than higher.

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