international trade
CHAPTER 8
REGIONAL TRADING AGREEMENTS
MULTIPLE-CHOICE QUESTIONS 1. The European Union is primarily intended to permit:
a. Countries to adopt scientific tariffs on imports
b. An agricultural commodity cartel within the group
c. The adoption of export tariffs for revenue purposes
d. Free movement of resources and products among member nations 4. Customs union theory reasons that the formation of a customs union will decrease members’ real welfare when the:
a. Trade diversion effect exceeds the trade creation effect
b. Trade production effect exceeds the trade consumption effect
c. Trade consumption effect exceeds the trade production effect
d. Trade creation effect exceeds the trade diversion effect 5. Which economic integration scheme is solely intended to abolish trade restrictions among member countries, while setting up common tariffs against nonmembers?
a. Economic union
b. Common market
c. Free trade area
d. Customs union 6. By 1992 the European Union had become a full-fledged:
a. Economic union
b. Monetary union
c. Common market
d. Fiscal union 9. Assume that the formation of a customs union turns out to include the lowest-cost world producer of the product in question. Which effect could not occur for the participating countries?
a. Trade creation–production effect
b. Trade creation–consumption effect
c. Trade diversion
d. Scale economies and competition 12. When products from high-cost suppliers within a customs union replace imports from a low-cost nation that is not a member of the customs union, there exist(s):
a. Dynamic welfare losses
b. Dynamic welfare gains
c. Trade creation
d. Trade diversion 13. Which form of economic integration occurs when participating countries abolish tariffs on trade among themselves, establish a common tariff on imports from nonmembers, and permit free movement of capital and labor within the organization?
a. Free trade area
b. Economic union
c. Common market
d. Monetary union
REGIONAL TRADING AGREEMENTS
MULTIPLE-CHOICE QUESTIONS 1. The European Union is primarily intended to permit:
a. Countries to adopt scientific tariffs on imports
b. An agricultural commodity cartel within the group
c. The adoption of export tariffs for revenue purposes
d. Free movement of resources and products among member nations 4. Customs union theory reasons that the formation of a customs union will decrease members’ real welfare when the:
a. Trade diversion effect exceeds the trade creation effect
b. Trade production effect exceeds the trade consumption effect
c. Trade consumption effect exceeds the trade production effect
d. Trade creation effect exceeds the trade diversion effect 5. Which economic integration scheme is solely intended to abolish trade restrictions among member countries, while setting up common tariffs against nonmembers?
a. Economic union
b. Common market
c. Free trade area
d. Customs union 6. By 1992 the European Union had become a full-fledged:
a. Economic union
b. Monetary union
c. Common market
d. Fiscal union 9. Assume that the formation of a customs union turns out to include the lowest-cost world producer of the product in question. Which effect could not occur for the participating countries?
a. Trade creation–production effect
b. Trade creation–consumption effect
c. Trade diversion
d. Scale economies and competition 12. When products from high-cost suppliers within a customs union replace imports from a low-cost nation that is not a member of the customs union, there exist(s):
a. Dynamic welfare losses
b. Dynamic welfare gains
c. Trade creation
d. Trade diversion 13. Which form of economic integration occurs when participating countries abolish tariffs on trade among themselves, establish a common tariff on imports from nonmembers, and permit free movement of capital and labor within the organization?
a. Free trade area
b. Economic union
c. Common market
d. Monetary union