Question 1

The common agriculture policy of the European Union has supported European farmers via:

Accepted Answer

A)  Export tariffs and domestic content regulations 
B)  Variable levies and voluntary export agreements 
C)  Content regulations and export subsidies 
D)  Export subsidies and variable levies 
A)  Export tariffs and domestic content regulations 
B)  Variable levies and voluntary export agreements 
C)  Content regulations and export subsidies 
D)  Export subsidies and variable levies D

Question 2

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 B

Question 3

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  False

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. 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 5

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 $\underline { \text { except }   }$

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 6

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 7

Concerning transition economies, what do the advocates of shock therapy propose?

Accepted Answer

Advocates of shock therapy maintain that

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

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 11

If a customs union included all of the countries in the world, there could exist only trade creation, not trade diversion.

Accepted Answer

A) True 
 B)False

Question 12

A $\underline {\text { dynamic } }$ welfare gain resulting from the formation of the European Union would be:

Accepted Answer

A)  Trade diversion 
B)  Trade creation 
C)  Diseconomies of scale 
D)  Economies of scale 
A)  Trade diversion 
B)  Trade creation 
C)  Diseconomies of scale 
D)  Economies of scale

Question 13

A political dilemma facing the former communist countries in the 1990s was that the transition from a centrally-planned economy to a market economy would result in short-run costs but long-run benefits.

Accepted Answer

A) True 
 B)False

Question 14

The failure of the centrally-planned economies was exemplified by all of the following$\underline { \text { except }   }$

Accepted Answer

A)  Interest rates that were below free-market levels 
B)  Consumer and producer goods of inferior quality 
C)  Declining rates of economic growth 
D)  Shortages of essential goods and services 
A)  Interest rates that were below free-market levels 
B)  Consumer and producer goods of inferior quality 
C)  Declining rates of economic growth 
D)  Shortages of essential goods and services

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. If Portugal forms a customs union with France, the resulting trade-creation effect equals $500.

Accepted Answer

A) True 
 B)False

Question 16

For decades, the Eastern European countries have suffered from

Accepted Answer

A)  Widespread price controls 
B)  Excessive competition 
C)  Lack of enforceable property rights 
D)  Both a and c 
A)  Widespread price controls 
B)  Excessive competition 
C)  Lack of enforceable property rights 
D)  Both a and c

Question 17

The transition of the former communist countries to market economies requires:

Accepted Answer

A)  Implementation of governmental price controls 
B)  Privatization of public property 
C)  Transforming competitive industries into monopolies 
D)  The sale of private industries to the government 
A)  Implementation of governmental price controls 
B)  Privatization of public property 
C)  Transforming competitive industries into monopolies 
D)  The sale of private industries to the government

Question 18

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 19

By joining NAFTA, the United States, Canada, and Mexico would find their short-run welfare decreasing due to the:

Accepted Answer

A)  Economies of scale effect 
B)  Business investment effect 
C)  Trade creation effect 
D)  Trade diversion effect 
A)  Economies of scale effect 
B)  Business investment effect 
C)  Trade creation effect 
D)  Trade diversion effect

Question 20

At the Maastricht Summit of 1991, European Union negotiators called for the pursuit of a:

Accepted Answer

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

The common agriculture policy of the European Union has supported European farmers via:

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

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

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 $\underline { \text { except } }$

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.

Concerning transition economies, what do the advocates of shock therapy propose?

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

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

If a customs union included all of the countries in the world, there could exist only trade creation, not trade diversion.

A $\underline {\text { dynamic } }$ welfare gain resulting from the formation of the European Union would be:

A political dilemma facing the former communist countries in the 1990s was that the transition from a centrally-planned economy to a market economy would result in short-run costs but long-run benefits.

The failure of the centrally-planned economies was exemplified by all of the following $\underline { \text { except } }$

For decades, the Eastern European countries have suffered from

The transition of the former communist countries to market economies requires:

The gains from having an optimum currency include

By joining NAFTA, the United States, Canada, and Mexico would find their short-run welfare decreasing due to the:

At the Maastricht Summit of 1991, European Union negotiators called for the pursuit of a:

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 common agriculture policy of the European Union has supported European farmers via:

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

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

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 ‾\underline { \text { except } } except ​

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.

Concerning transition economies, what do the advocates of shock therapy propose?

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

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

If a customs union included all of the countries in the world, there could exist only trade creation, not trade diversion.

A dynamic ‾\underline {\text { dynamic } } dynamic ​ welfare gain resulting from the formation of the European Union would be:

A political dilemma facing the former communist countries in the 1990s was that the transition from a centrally-planned economy to a market economy would result in short-run costs but long-run benefits.

The failure of the centrally-planned economies was exemplified by all of the following except ‾\underline { \text { except } } except ​

For decades, the Eastern European countries have suffered from

The transition of the former communist countries to market economies requires:

The gains from having an optimum currency include

By joining NAFTA, the United States, Canada, and Mexico would find their short-run welfare decreasing due to the:

At the Maastricht Summit of 1991, European Union negotiators called for the pursuit of a:

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

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 $\underline { \text { except } }$

A $\underline {\text { dynamic } }$ welfare gain resulting from the formation of the European Union would be:

The failure of the centrally-planned economies was exemplified by all of the following $\underline { \text { except } }$