Question 1

All welfare effects of a regional trading agreement are static.

Accepted Answer

A) True 
 B)False  False

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 SS1U1B1GS1U1B0 and DS1U1B1GS1U1B0.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 D

Question 3

The WTO's efforts to promote trade liberalization globally:

Accepted Answer

A)  have become easier 
B)  have become more difficult 
C)  have remained stable 
D)  none of these is correct 
A)  have become easier 
B)  have become more difficult 
C)  have remained stable 
D)  none of these is correct B

Question 4

With a preferential trading arrangement,a group of countries agrees to unilaterally reduce tariffs applied to imports from all countries of the world.

Accepted Answer

A) True 
 B)False

Question 5

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 SS1U1B1GS1U1B0 and DS1U1B1GS1U1B0.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 6

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 7

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 8

When Western European democracies removed trade barriers and began to form the European Community,one of their hopes was that their economic and financial ties would bind them together so that it would not be in their interest to go to war again.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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 11

U.S.labor unions argued against the North American Free Trade Agreement on the grounds that it would result in U.S.companies relocating in Mexico in order to take advantage of lower wage rates.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

The larger the size and the greater the number of countries in a customs union,the greater will be the trade-diversion effect.

Accepted Answer

A) True 
 B)False

Question 14

When Mexico became a part of NAFTA,along with Canada and the United States,it:

Accepted Answer

A)  Eliminated tariffs against Canada and the United States but maintained them against nonmembers 
B)  Eliminated tariffs against Canada,the United States,and all nonmember countries 
C)  Increased tariffs against Canada the United States,and all nonmember countries 
D)  Increased tariffs against Canada and the United States,but did not change them against nonmember countries 
A)  Eliminated tariffs against Canada and the United States but maintained them against nonmembers 
B)  Eliminated tariffs against Canada,the United States,and all nonmember countries 
C)  Increased tariffs against Canada the United States,and all nonmember countries 
D)  Increased tariffs against Canada and the United States,but did not change them against nonmember countries

Question 15

As of 2002,members of the European Monetary Union agreed to replace their currencies with the:

Accepted Answer

A)  mark 
B)  dollar 
C)  franc 
D)  euro 
A)  mark 
B)  dollar 
C)  franc 
D)  euro

Question 16

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 17

A static welfare effect resulting from the formation of the European Union would be:

Accepted Answer

A)  Economies of scale 
B)  Trade diversion 
C)  Investment incentives 
D)  Increased competition 
A)  Economies of scale 
B)  Trade diversion 
C)  Investment incentives 
D)  Increased competition

Question 18

Critics of the North American Free Trade Agreement maintained that it would result in manufacturing firms fleeing Mexico's stringent pollution-control policies and relocating in the United States and Canada.

Accepted Answer

A) True 
 B)False

Question 19

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 20

The Maastricht Treaty of 1991 established a blueprint for economic union and monetary union for European Union members.

Accepted Answer

A) True 
 B)False

All welfare effects of a regional trading agreement are static.

The WTO's efforts to promote trade liberalization globally:

With a preferential trading arrangement,a group of countries agrees to unilaterally reduce tariffs applied to imports from all countries of the world.

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.

Figure 8.2.Portugal's Steel Market -Consider Figure 8.2.With free trade Portugal will

When Western European democracies removed trade barriers and began to form the European Community,one of their hopes was that their economic and financial ties would bind them together so that it would not be in their interest to go to war again.

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

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.

U.S.labor unions argued against the North American Free Trade Agreement on the grounds that it would result in U.S.companies relocating in Mexico in order to take advantage of lower wage rates.

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

The larger the size and the greater the number of countries in a customs union,the greater will be the trade-diversion effect.

When Mexico became a part of NAFTA,along with Canada and the United States,it:

As of 2002,members of the European Monetary Union agreed to replace their currencies with the:

A static welfare effect resulting from the formation of the European Union would be:

Critics of the North American Free Trade Agreement maintained that it would result in manufacturing firms fleeing Mexico's stringent pollution-control policies and relocating in the United States and Canada.

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

The Maastricht Treaty of 1991 established a blueprint for economic union and monetary union for European Union members.

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

All welfare effects of a regional trading agreement are static.

The WTO's efforts to promote trade liberalization globally:

With a preferential trading arrangement,a group of countries agrees to unilaterally reduce tariffs applied to imports from all countries of the world.

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.

Figure 8.2.Portugal's Steel Market -Consider Figure 8.2.With free trade Portugal will

When Western European democracies removed trade barriers and began to form the European Community,one of their hopes was that their economic and financial ties would bind them together so that it would not be in their interest to go to war again.

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

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.

U.S.labor unions argued against the North American Free Trade Agreement on the grounds that it would result in U.S.companies relocating in Mexico in order to take advantage of lower wage rates.

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

The larger the size and the greater the number of countries in a customs union,the greater will be the trade-diversion effect.

When Mexico became a part of NAFTA,along with Canada and the United States,it:

As of 2002,members of the European Monetary Union agreed to replace their currencies with the:

A static welfare effect resulting from the formation of the European Union would be:

Critics of the North American Free Trade Agreement maintained that it would result in manufacturing firms fleeing Mexico's stringent pollution-control policies and relocating in the United States and Canada.

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

The Maastricht Treaty of 1991 established a blueprint for economic union and monetary union for European Union members.

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