Question 1

The transition from government-controlled prices to market-determined prices in the former communist countries would be expected to result in:

Accepted Answer

A)  Price stability 
B)  Price deflation 
C)  Price inflation 
D)  None of the above 
A)  Price stability 
B)  Price deflation 
C)  Price inflation 
D)  None of the above

Question 2

According to the theory of optimum currency areas,a currency area has the least chance for success when:

Accepted Answer

A)  Countries of the currency area have differing business cycles 
B)  Workers have a high degree of mobility across borders of the currency area 
C)  Prices and wages can be adjusted in response to economic disturbances 
D)  A single monetary policy affects all member countries in the same manner 
A)  Countries of the currency area have differing business cycles 
B)  Workers have a high degree of mobility across borders of the currency area 
C)  Prices and wages can be adjusted in response to economic disturbances 
D)  A single monetary policy affects all member countries in the same manner

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 6

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 7

Under the European Union's common agricultural policy,a variable import levy equals the:

Accepted Answer

A)  Amount by which the EU's support price exceeds the world price 
B)  Amount by which the world price exceeds the EU's support price 
C)  Support price of the EU 
D)  World price 
A)  Amount by which the EU's support price exceeds the world price 
B)  Amount by which the world price exceeds the EU's support price 
C)  Support price of the EU 
D)  World price

Question 8

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 9

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 10

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 11

Suppose that steel from Japan faces a 20 percent tariff in France and a 25 percent tariff in Italy,while France and Italy maintain free trade between each other.France and Italy are therefore part 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 12

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 13

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 14

The former communist countries included all of the following except:

Accepted Answer

A)  East Germany 
B)  Soviet Union 
C)  Austria 
D)  Poland 
A)  East Germany 
B)  Soviet Union 
C)  Austria 
D)  Poland

Question 15

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 16

The transition of the former communist countries to market economies would likely result in:

Accepted Answer

A)  The implementation of price ceilings 
B)  The implementation of price floors 
C)  Price inflation 
D)  Price deflation 
A)  The implementation of price ceilings 
B)  The implementation of price floors 
C)  Price inflation 
D)  Price deflation

Question 17

The failure of the centrally-planned economies was exemplified by all of the following 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 18

The economic reforms of the early 1990s that occurred in the former Soviet Union and Eastern Europe resulted in:

Accepted Answer

A)  The formation of the Council for Mutual Economic Assistance 
B)  Multinational firms refusing to operate in these nations 
C)  A movement from centrally-planned economies toward market economies 
D)  A movement from market economies toward centrally-planned economies 
A)  The formation of the Council for Mutual Economic Assistance 
B)  Multinational firms refusing to operate in these nations 
C)  A movement from centrally-planned economies toward market economies 
D)  A movement from market economies toward centrally-planned economies

Question 19

What is meant by economic integration?

Accepted Answer

The term refers to the process

Question 20

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.The value of the trade creation effect,resulting from the Greece/France customs union,equals:

Accepted Answer

A)  $5 
B)  $10 
C)  $15 
D)  $20 
A)  $5 
B)  $10 
C)  $15 
D)  $20

The transition from government-controlled prices to market-determined prices in the former communist countries would be expected to result in:

According to the theory of optimum currency areas,a currency area has the least chance for success when:

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

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.

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 gains from having an optimum currency include

Under the European Union's common agricultural policy,a variable import levy equals the:

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

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

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.

Suppose that steel from Japan faces a 20 percent tariff in France and a 25 percent tariff in Italy,while France and Italy maintain free trade between each other.France and Italy are therefore part of a (an):

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

The common agricultural policy of the European Union has:

The former communist countries included all of the following 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.

The transition of the former communist countries to market economies would likely result in:

The failure of the centrally-planned economies was exemplified by all of the following except:

The economic reforms of the early 1990s that occurred in the former Soviet Union and Eastern Europe resulted in:

What is meant by economic integration?

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 transition from government-controlled prices to market-determined prices in the former communist countries would be expected to result in:

According to the theory of optimum currency areas,a currency area has the least chance for success when:

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

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.

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 gains from having an optimum currency include

Under the European Union's common agricultural policy,a variable import levy equals the:

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

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

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.

Suppose that steel from Japan faces a 20 percent tariff in France and a 25 percent tariff in Italy,while France and Italy maintain free trade between each other.France and Italy are therefore part of a (an):

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

The common agricultural policy of the European Union has:

The former communist countries included all of the following 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.

The transition of the former communist countries to market economies would likely result in:

The failure of the centrally-planned economies was exemplified by all of the following except:

The economic reforms of the early 1990s that occurred in the former Soviet Union and Eastern Europe resulted in:

What is meant by economic integration?

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