Question 1

________ is said to exist when the formation of a regional trading group leads to the reduction of trade with nonmember countries in favor of member countries.

Accepted Answer

A)  Trade creation
B)  Trade diversion
C)  Trade exclusion
D)  Trade distortion B

Question 2

A long term goal of the NAFTA member countries is to integrate their economies into a single economic entity with a common currency as well as common trade policies and internal factor mobility.

Accepted Answer

A) True 
 B)False  False

Question 3

NAFTA was a controversial issue in the 2008 presidential campaign,particularly in the Democratic primaries.

Accepted Answer

A) True 
 B)False  True

Question 4

The ________ is the chief executive body of the European Union (EU).

Accepted Answer

A)  European Parliament
B)  European Executive Branch
C)  European Trade Body
D)  European Commission

Question 5

If a customs union leads to a large amount of trade creation relative to trade diversion,it may be beneficial to world welfare.

Accepted Answer

A) True 
 B)False

Question 6

If a customs union leads to a large amount of trade diversion relative to trade creation,it may be beneficial to world welfare.

Accepted Answer

A) True 
 B)False

Question 7

Russia is a member of the European Union.

Accepted Answer

A) True 
 B)False

Question 8

In addition to tariff lowering provisions,the NAFTA agreement includes two side agreements on

Accepted Answer

A)  Mexican exchange rate policy and Mexican foreign policy.
B)  U.S. exchange rate policy and U.S. foreign policy.
C)  environmental and labor market issues.
D)  All of the above.

Question 9

The European Union (EU)is an example of a

Accepted Answer

A)  customs union.
B)  free trade area.
C)  reciprocal trade agreement.
D)  None of the above.

Question 10

Most economists estimate that the U.S.factor of production most likely to be hurt by the formation of the NAFTA is unskilled U.S.labor.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following countries became the newest members of the European Union in 2007?

Accepted Answer

A)  Bulgaria and Romania
B)  Greece and Sweden
C)  Albania and Cyprus
D)  None of the above

Question 12

Answer the question(s)below based upon the following diagram which depicts country A's market for its importable.
 
-Refer to the figure above.If A forms a customs union with B,it will import

Accepted Answer

A)  400 units from B.
B)  200 units from C.
C)  200 units from each.
D)  400 units from B and 200 units from C.

Question 13

Prior to agreeing to join NAFTA,Mexico had followed a free trade policy for more than 30 years.

Accepted Answer

A) True 
 B)False

Question 14

Why is NAFTA controversial? Briefly describe both sides of this controversy.

Accepted Answer

The answer of Why is NAFTA controversial? Briefly describe both...

Question 15

The welfare impact of a preferential trade agreement depends on the difference between the amount of new trade that takes place because of the agreement and the change in international trade patterns that arises because of it.

Accepted Answer

A) True 
 B)False

Question 16

Membership in a customs union may be either welfare improving or welfare worsening.Illustrate and explain.

Accepted Answer

The answer of Membership in a customs union may be...

Question 17

________ are a form of regional integration where member countries lower internal trade barriers and establish a common barrier against nonmembers.

Accepted Answer

A)  Customs unions
B)  Free trade areas
C)  Reciprocal trade agreements
D)  None of the above.

Question 18

As of 2002 the European Union has announced that 10 new members will be allowed to join the union? Which of the following countries is included in that group?

Accepted Answer

A)  Poland
B)  Russia
C)  Turkey
D)  All of the above.

Question 19

Answer the question(s)below based upon the following diagram which depicts country A's market for its importable.
 
-Refer to the figure above.If A forms a customs union with C,A's welfare will change by

Accepted Answer

A)  $a + $e
B)  $a + $b + $c + $d + $e
C)  $a + $e - $b - $c - $d
D)  $a + $e - $h - $i - $j

Question 20

Customs unions and free trade areas are identical in the manner in which member countries treat imports from nonmember countries.

Accepted Answer

A) True 
 B)False

Exam 9: Preferential Trade Agreements

________ is said to exist when the formation of a regional trading group leads to the reduction of trade with nonmember countries in favor of member countries.

A long term goal of the NAFTA member countries is to integrate their economies into a single economic entity with a common currency as well as common trade policies and internal factor mobility.

NAFTA was a controversial issue in the 2008 presidential campaign,particularly in the Democratic primaries.

The ________ is the chief executive body of the European Union (EU) .

If a customs union leads to a large amount of trade creation relative to trade diversion,it may be beneficial to world welfare.

If a customs union leads to a large amount of trade diversion relative to trade creation,it may be beneficial to world welfare.

Russia is a member of the European Union.

In addition to tariff lowering provisions,the NAFTA agreement includes two side agreements on

The European Union (EU) is an example of a

Most economists estimate that the U.S.factor of production most likely to be hurt by the formation of the NAFTA is unskilled U.S.labor.

Which of the following countries became the newest members of the European Union in 2007?

Answer the question(s) below based upon the following diagram which depicts country A's market for its importable. -Refer to the figure above.If A forms a customs union with B,it will import

Prior to agreeing to join NAFTA,Mexico had followed a free trade policy for more than 30 years.

Why is NAFTA controversial? Briefly describe both sides of this controversy.

The welfare impact of a preferential trade agreement depends on the difference between the amount of new trade that takes place because of the agreement and the change in international trade patterns that arises because of it.

Membership in a customs union may be either welfare improving or welfare worsening.Illustrate and explain.

________ are a form of regional integration where member countries lower internal trade barriers and establish a common barrier against nonmembers.

As of 2002 the European Union has announced that 10 new members will be allowed to join the union? Which of the following countries is included in that group?

Answer the question(s) below based upon the following diagram which depicts country A's market for its importable. -Refer to the figure above.If A forms a customs union with C,A's welfare will change by

Customs unions and free trade areas are identical in the manner in which member countries treat imports from nonmember countries.