Regional Trading Arrangements MCQs

Option A: wages in the United States will rise relative to Mexican wages

Option B: American jobs will be lost to workers in Mexico

Option C: The environment is not adequately protected by NAFTA

Option D: None of the above

Correct Answer: wages in the United States will rise relative to Mexican wages ✔

Option A: relatively high; relatively large

Option B: relatively high; relatively small

Option C: relatively low ; relatively large

Option D: relatively low ; relatively small

Correct Answer: relatively high; relatively large ✔

Option A: trade diversion effect

Option B: increased monopoly power of firms

Option C: decrease customs costs

Option D: economy-of-scale effect

Correct Answer: economy-of-scale effect ✔

Option A: trade creation

Option B: trade diversion

Option C: trade exclusion

Option D: trade distortion

Correct Answer: trade creation ✔

Option A: trade creation

Option B: trade diversion

Option C: trade exclusion

Option D: trade distortion

Correct Answer: trade diversion ✔

Option A: $0

Option B: $10,000

Option C: $20,000

Option D: $40,000

Correct Answer: $0 ✔

Option A: 400 units from B

Option B: 200 units from C

Option C: 200 units from each

Option D: 400 units from B and 200 units from C

Correct Answer: 200 units from C ✔

Option A: a country moves from autarky to free trade

Option B: a movement to a customs union reduces the costs of trade through standardization economic integration results in a

Option C: economic integration results in a movement in product origin to a lower cost member country

Option D: economic integration results in a shift in product origin from a lower-cost, nonmember country to a member country having higher costs

Correct Answer: economic integration results in a shift in product origin from a lower-cost, nonmember country to a member country having higher costs ✔

Option A: elimination of trade restrictions among member countries

Option B: a common tax system and monetary union

Option C: prohibition to restriction on factor movements

Option D: a common tariff levied in imports from nonmembers

Correct Answer: a common tax system and monetary union ✔

Option A: dollar

Option B: mark

Option C: franc

Option D: euro

Correct Answer: euro ✔

Option A: made it harder for Americans of compete against the Germans in the British market

Option B: made it easier for Americans to compete against the Germans in the British market

Option C: made it harder for Americans to compete against the Japanese in the British market

Option D: made it easier for Americans to compete against the Japanese in the British

Correct Answer: made it harder for Americans of compete against the Germans in the British market ✔

Option A: customs union

Option B: economic union

Option C: common market

Option D: free trade area

Correct Answer: common market ✔

Option A: adopted a common fiscal policy for member nations

Option B: established a common system of agricultural price supports

Option C: disbanded all tariffs between its member countries

Option D: levied common tariffs on products imported from nonmembers

Correct Answer: adopted a common fiscal policy for member nations ✔

Option A: amount the which the EU’s support price exceeds the world price

Option B: amount by which the world price exceeds the EU’s support price

Option C: support price of the EU

Option D: world price

Correct Answer: world price ✔

Option A: a country moves from autarky to free trade

Option B: a movement to a customs union reduces the cost of trade through standardization

Option C: economic integration results in a movement in product origin to a lower-cost member country

Option D: economic integration results in a shift in product origin from a lower cost nonmember country to a member country having higher costs

Correct Answer: economic integration results in a movement in product origin to a lower-cost member country ✔

Option A: trade creation

Option B: trade diversion

Option C: dynamic welfare effects

Option D: comprehensive welfare effects

Correct Answer: trade diversion ✔

Option A: free-trade area

Option B: customs union

Option C: common market

Option D: monetary union

Correct Answer: free-trade area ✔

Option A: free trade area

Option B: customs union

Option C: common market

Option D: monetary union

Correct Answer: monetary union ✔

Option A: free trade area

Option B: customs union

Option C: common market

Option D: monetary union

Correct Answer: free trade area ✔

Option A: customs union

Option B: free trade area

Option C: reciprocal trade agreement

Option D: monetary union

Correct Answer: monetary union ✔

Option A: 400 units from B

Option B: 200 units from C

Option C: 200 units from each

Option D: 400 units from B and 200 units from C

Correct Answer: 400 units from B ✔

Option A: monetary union

Option B: free trade area

Option C: common market

Option D: customs union

Correct Answer: ✔

Option A: 700 units from country C

Option B: 700 units from country C and 600 units from country B

Option C: 600 units from country C

Option D: 600 units from country C and 400 units from country B

Correct Answer: 600 units from country C ✔

Option A: variable levies

Option B: export subsidies

Option C: trigger prices

Option D: countertrade

Correct Answer: export subsidies ✔

Option A: free trade area

Option B: customs union

Option C: common market

Option D: economic union

Correct Answer: common market ✔

Option A: increase American farm exports to the EU

Option B: decrease American farm exports to the EU

Option C: lowered the price of American farm exports to the EU

Option D: not affected the price of American farm exports to the EU

Correct Answer: decrease American farm exports to the EU ✔

Option A: Capital

Option B: land

Option C: skilled labor

Option D: unskilled labor

Correct Answer: skilled labor ✔

Option A: Spain

Option B: Germany

Option C: France

Option D: Iceland

Correct Answer: Iceland ✔

Option A: highly competitive

Option B: highly noncompetitive

Option C: small in economic importance

Option D: geographically distant

Correct Answer: highly competitive ✔