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

Question 2

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

Accepted Answer

Advocates of shock therapy maintain that

Question 3

Suppose that Mexico and Canada form a free-trade area.The Mexicans then decrease refrigerator manufacturing and increase imports of refrigerators from Canada,while the Canadians decrease auto manufacturing and import more autos from Mexico.This is an example of trade creation.

Accepted Answer

A) True 
 B)False

Question 4

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 5

From the 1940s to the 1980s,the former communist countries remained isolated from the world economy,primarily due to different tariff systems among the former communist countries.

Accepted Answer

A) True 
 B)False

Question 6

The European Union has achieved all of the following except:

Accepted Answer

A)  Adopted a common fiscal policy for member nations 
B)  Established a common system of agricultural price supports 
C)  Disbanded all tariffs among its member countries 
D)  Levied common tariffs on products imported from nonmembers 
A)  Adopted a common fiscal policy for member nations 
B)  Established a common system of agricultural price supports 
C)  Disbanded all tariffs among its member countries 
D)  Levied common tariffs on products imported from nonmembers

Question 7

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 8

When a group of countries establish a free-trade area,they achieve the highest stage of economic integration.

Accepted Answer

A) True 
 B)False

Question 9

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

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
  
-Referring to Figure 8.1,suppose Greece forms a customs union with France.Greece will import:

Accepted Answer

A)  3 calculators at a per-unit price of $30 
B)  3 calculators at a per-unit price of $40 
C)  6 calculators at a per-unit price of $30 
D)  6 calculators at a per-unit price of $40 
A)  3 calculators at a per-unit price of $30 
B)  3 calculators at a per-unit price of $40 
C)  6 calculators at a per-unit price of $30 
D)  6 calculators at a per-unit price of $40

Question 11

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 12

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 13

By removing discriminatory government procurement laws within the European Union,member nations hoped to benefit from all of the following except:

Accepted Answer

A)  EU governments could purchase from the cheapest foreign suppliers 
B)  Increased competition occurs as domestic firms compete with foreign firms previously shut out of the domestic market 
C)  Industries are restructured which permits surviving firms to achieve economies of scale 
D)  Agricultural prices fall as more farmers are allowed to produce their commodities 
A)  EU governments could purchase from the cheapest foreign suppliers 
B)  Increased competition occurs as domestic firms compete with foreign firms previously shut out of the domestic market 
C)  Industries are restructured which permits surviving firms to achieve economies of scale 
D)  Agricultural prices fall as more farmers are allowed to produce their commodities

Question 14

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 15

In the United States,the proposed North American Free Trade Agreement was generally supported by:

Accepted Answer

A)  Labor unions 
B)  Electronics firms 
C)  Environmentalists 
D)  Citrus producers 
A)  Labor unions 
B)  Electronics firms 
C)  Environmentalists 
D)  Citrus producers

Question 16

Suppose that Canada has domestic firms that could supply its entire market for radios at a price of $50,while U.S.firms could supply radios at $40 and Mexico at $30.Suppose that Canada initially has a 50 percent tariff on imports of radios and then forms a free trade area with the United States.As a result,Canada realizes:

Accepted Answer

A)  Trade creation, no trade diversion, and overall welfare gains 
B)  Trade creation, no trade diversion, and overall welfare losses 
C)  Trade diversion, no trade creation, and potential overall welfare losses 
D)  Trade diversion, trade creation, and potential overall welfare gains 
A)  Trade creation, no trade diversion, and overall welfare gains 
B)  Trade creation, no trade diversion, and overall welfare losses 
C)  Trade diversion, no trade creation, and potential overall welfare losses 
D)  Trade diversion, trade creation, and potential overall welfare gains

Question 17

The regional trade block of the former communist countries,which lasted from 1949-1991,was known as the:

Accepted Answer

A)  Eastern European Economic Area 
B)  Nordic Preferential Trade Agreement 
C)  Council for Mutual Economic Assistance 
D)  European Industrial Cooperation Union 
A)  Eastern European Economic Area 
B)  Nordic Preferential Trade Agreement 
C)  Council for Mutual Economic Assistance 
D)  European Industrial Cooperation Union

Question 18

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 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

Pricing of consumer goods in the former Soviet Union was typically regulated by price ceilings which led to shortages.

Accepted Answer

A) True 
 B)False

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

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

Suppose that Mexico and Canada form a free-trade area.The Mexicans then decrease refrigerator manufacturing and increase imports of refrigerators from Canada,while the Canadians decrease auto manufacturing and import more autos from Mexico.This is an example of trade creation.

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

From the 1940s to the 1980s,the former communist countries remained isolated from the world economy,primarily due to different tariff systems among the former communist countries.

The European Union has achieved all of the following except:

When a group of countries establish a free-trade area,they achieve the highest stage of economic integration.

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.

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.

By removing discriminatory government procurement laws within the European Union,member nations hoped to benefit from all of the following except:

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

In the United States,the proposed North American Free Trade Agreement was generally supported by:

The regional trade block of the former communist countries,which lasted from 1949-1991,was known as the:

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

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.

Pricing of consumer goods in the former Soviet Union was typically regulated by price ceilings which led to shortages.

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

Balance-of-payments Adjustments

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:

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

Suppose that Mexico and Canada form a free-trade area.The Mexicans then decrease refrigerator manufacturing and increase imports of refrigerators from Canada,while the Canadians decrease auto manufacturing and import more autos from Mexico.This is an example of trade creation.

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

From the 1940s to the 1980s,the former communist countries remained isolated from the world economy,primarily due to different tariff systems among the former communist countries.

The European Union has achieved all of the following except:

When a group of countries establish a free-trade area,they achieve the highest stage of economic integration.

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.

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.

By removing discriminatory government procurement laws within the European Union,member nations hoped to benefit from all of the following except:

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

In the United States,the proposed North American Free Trade Agreement was generally supported by:

The regional trade block of the former communist countries,which lasted from 1949-1991,was known as the:

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

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.

Pricing of consumer goods in the former Soviet Union was typically regulated by price ceilings which led to shortages.

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

Balance-of-payments Adjustments

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