Question 1

When the North American Free Trade Agreement was being considered,American critics argued that it would likely result in

Accepted Answer

A)  a reduction in U.S.competitiveness against Canada 
B)  a loss of American jobs to Mexico 
C)  a gain in U.S.competitiveness against Mexico 
D)  additional jobs for unskilled workers in the United States 
A)  a reduction in U.S.competitiveness against Canada 
B)  a loss of American jobs to Mexico 
C)  a gain in U.S.competitiveness against Mexico 
D)  additional jobs for unskilled workers in the United States

Question 2

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.With free trade,Greece imports:

Accepted Answer

A)  3 calculators from France 
B)  5 calculators from France 
C)  3 calculators from Germany 
D)  5 calculators from Germany 
A)  3 calculators from France 
B)  5 calculators from France 
C)  3 calculators from Germany 
D)  5 calculators from Germany

Question 3

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.??As a result of the $20 tariff,Greece's consumer surplus falls by:

Accepted Answer

A)  $90 
B)  $100 
C)  $110 
D)  $120 
A)  $90 
B)  $100 
C)  $110 
D)  $120

Question 4

The gains from having an optimum currency include

Accepted Answer

A)  Price differentiation 
B)  Lower competition 
C)  Lower transaction costs 
D)  Both b and c 
A)  Price differentiation 
B)  Lower competition 
C)  Lower transaction costs 
D)  Both b and c

Question 5

Regarding stages of economic integration,a free trade area

Accepted Answer

A)  goes beyond a customs union by including a common external tariff 
B)  falls short of a customs union by excluding a common external tariff 
C)  goes beyond a common market by including a common transportation policy 
D)  goes beyond a common market by including a common agricultural policy 
A)  goes beyond a customs union by including a common external tariff 
B)  falls short of a customs union by excluding a common external tariff 
C)  goes beyond a common market by including a common transportation policy 
D)  goes beyond a common market by including a common agricultural policy

Question 6

Regarding stages of economic integration,a customs union

Accepted Answer

A)  goes beyond a free trade area by including a common external tariff 
B)  falls short of a free trade area by excluding a common external tariff 
C)  goes beyond a common market by including a common transportation policy 
D)  goes beyond a common market by including a common agricultural policy 
A)  goes beyond a free trade area by including a common external tariff 
B)  falls short of a free trade area by excluding a common external tariff 
C)  goes beyond a common market by including a common transportation policy 
D)  goes beyond a common market by including a common agricultural policy

Question 7

Under the variable levy system of the European Union,EU farmers are protected against import competition by tariffs that vary inversely with the world price.

Accepted Answer

A) True 
 B)False

Question 8

Within a customs union,broader markets may also promote greater competition among producers.

Accepted Answer

A) True 
 B)False

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.With free trade,Portugal produces 15 tons of steel,consumes 30 tons of steel,and imports 15 tons of steel.

Accepted Answer

A) True 
 B)False

Question 10

Among the benefits that a regional trading arrangement can provide are all of these EXCEPT:

Accepted Answer

A)  economies of large scale production 
B)  specialization fostering 
C)  attracting foreign investment 
D)  a shorter production time 
A)  economies of large scale production 
B)  specialization fostering 
C)  attracting foreign investment 
D)  a shorter production time

Question 11

The formation of a regional trading bloc results in trade creation if

Accepted Answer

A)  inefficient domestic production is replaced by more efficient production from another member country 
B)  inefficient domestic production is replaced by more efficient production from a nonmember country 
C)  member countries import more,but export less to nonmember countries 
D)  member countries export less,but import more from nonmember countries 
A)  inefficient domestic production is replaced by more efficient production from another member country 
B)  inefficient domestic production is replaced by more efficient production from a nonmember country 
C)  member countries import more,but export less to nonmember countries 
D)  member countries export less,but import more from nonmember countries

Question 12

If Chile and Mexico abolish all tariffs on each other's products while maintaining their own tariffs against other countries,these two countries have formed a customs union.

Accepted Answer

A) True 
 B)False

Question 13

Which organization of nations permits free trade among its members in industrial goods,while each member maintains freedom in its trade policies toward non-member countries?

Accepted Answer

A)  European Union 
B)  Benelux 
C)  Council for Mutual Economic Assistance 
D)  North American Free Trade Association 
A)  European Union 
B)  Benelux 
C)  Council for Mutual Economic Assistance 
D)  North American Free Trade Association

Question 14

For the United States,the political debate of joining NAFTA was very intense because of Mexico's

Accepted Answer

A)  relatively low wage levels 
B)  relatively low levels of environmental enforcement 
C)  relatively low standards for protecting workers 
D)  all of the above 
A)  relatively low wage levels 
B)  relatively low levels of environmental enforcement 
C)  relatively low standards for protecting workers 
D)  all of the above

Question 15

If the United States and Canada implement a regional trading agreement that results in the two countries eliminating trade barriers between themselves while maintaining separate trade barriers against nonmember countries,they have formed a

Accepted Answer

A)  common market 
B)  customs union 
C)  free trade area 
D)  economic union 
A)  common market 
B)  customs union 
C)  free trade area 
D)  economic union

Question 16

The common agricultural policy of the European Union has:

Accepted Answer

A)  Increased American farm exports to the EU 
B)  Decreased American farm exports to the EU 
C)  Lowered the price of American farm exports to the EU 
D)  Not affected the price of American farm exports to the EU 
A)  Increased American farm exports to the EU 
B)  Decreased American farm exports to the EU 
C)  Lowered the price of American farm exports to the EU 
D)  Not affected the price of American farm exports to the EU

Question 17

The United States serves as an example of:

Accepted Answer

A)  a common market 
B)  a common union 
C)  a monetary union 
D)  a free trade area 
A)  a common market 
B)  a common union 
C)  a monetary union 
D)  a free trade area

Question 18

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 19

Smaller nations may seek safe haven trading arrangements with larger nations when future access to that market seems uncertain.This was reason for the formation of:

Accepted Answer

A)  WTO 
B)  GATT 
C)  NAFTA 
D)  none of these 
A)  WTO 
B)  GATT 
C)  NAFTA 
D)  none of these

Question 20

Members of the European Union find that "trade creation" is fostered when their economies are:

Accepted Answer

A)  Highly competitive 
B)  Highly noncompetitive 
C)  Small in economic importance 
D)  Geographically distant 
A)  Highly competitive 
B)  Highly noncompetitive 
C)  Small in economic importance 
D)  Geographically distant

When the North American Free Trade Agreement was being considered,American critics argued that it would likely result in

The gains from having an optimum currency include

Regarding stages of economic integration,a free trade area

Regarding stages of economic integration,a customs union

Under the variable levy system of the European Union,EU farmers are protected against import competition by tariffs that vary inversely with the world price.

Within a customs union,broader markets may also promote greater competition among producers.

Among the benefits that a regional trading arrangement can provide are all of these EXCEPT:

The formation of a regional trading bloc results in trade creation if

If Chile and Mexico abolish all tariffs on each other's products while maintaining their own tariffs against other countries,these two countries have formed a customs union.

Which organization of nations permits free trade among its members in industrial goods,while each member maintains freedom in its trade policies toward non-member countries?

For the United States,the political debate of joining NAFTA was very intense because of Mexico's

If the United States and Canada implement a regional trading agreement that results in the two countries eliminating trade barriers between themselves while maintaining separate trade barriers against nonmember countries,they have formed a

The common agricultural policy of the European Union has:

The United States serves as an example of:

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

Smaller nations may seek safe haven trading arrangements with larger nations when future access to that market seems uncertain.This was reason for the formation of:

Members of the European Union find that "trade creation" is fostered when their economies are:

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

When the North American Free Trade Agreement was being considered,American critics argued that it would likely result in

The gains from having an optimum currency include

Regarding stages of economic integration,a free trade area

Regarding stages of economic integration,a customs union

Under the variable levy system of the European Union,EU farmers are protected against import competition by tariffs that vary inversely with the world price.

Within a customs union,broader markets may also promote greater competition among producers.

Among the benefits that a regional trading arrangement can provide are all of these EXCEPT:

The formation of a regional trading bloc results in trade creation if

If Chile and Mexico abolish all tariffs on each other's products while maintaining their own tariffs against other countries,these two countries have formed a customs union.

Which organization of nations permits free trade among its members in industrial goods,while each member maintains freedom in its trade policies toward non-member countries?

For the United States,the political debate of joining NAFTA was very intense because of Mexico's

If the United States and Canada implement a regional trading agreement that results in the two countries eliminating trade barriers between themselves while maintaining separate trade barriers against nonmember countries,they have formed a

The common agricultural policy of the European Union has:

The United States serves as an example of:

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

Smaller nations may seek safe haven trading arrangements with larger nations when future access to that market seems uncertain.This was reason for the formation of:

Members of the European Union find that "trade creation" is fostered when their economies are:

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