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Page 101
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
251. As of 1992, the European Union had achieved the monetary union stage of economic integration.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
252. The Maastricht Treaty of 1991 established a blueprint for economic union and monetary union for European Union
members.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
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253. It is generally agreed that completing the common market stage of integration for the European Union contributed to
overall welfare losses due to trade diversion exceeding trade creation.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
254. Government procurement liberalization permits a country to realize cost savings resulting from the trade effect,
competition effect, and economies-of-scale effect.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
255. During the 1980s and 1990s, the United States negotiated free-trade agreements with Israel, Mexico, and Canada.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
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KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
256. 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.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
257. 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.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
258. Negotiating the North American Free Trade Agreement was relatively easy since it involved meshing two large
industrial countries with a developing country.
a.
True
b.
False
ANSWER:
False
POINTS:
1
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Page 104
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
259. Critics of the North American Free Trade Agreement maintained that it would result in manufacturing firms fleeing
Mexico’s stringent pollution-control policies and relocating in the United States and Canada.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
260. U.S. labor unions argued against the North American Free Trade Agreement on the grounds that it would result in
U.S. companies relocating in Mexico in order to take advantage of lower wage rates.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
261. The North American Free Trade Agreement was expected to provide proportionately smaller benefits to Mexico than
to the United States or Canada.
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a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
262. All welfare consequences of a regional trading arrangement are dynamic
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Effects of a Regional Trading Arrangement
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
263. All welfare effects of a regional trading agreement are static.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Effects of a Regional Trading Arrangement
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
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264. Within a customs union, broader markets may also promote greater competition among producers.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Effects of a Regional Trading Arrangement
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
265. Following World War II, Western European nations suffered from balance-of-payments deficits due to
reconstruction.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
266. When Western European democracies removed trade barriers and began to form the European Community, one of
their hopes was that their economic and financial ties would bind them together so that it would not be in their interest to
go to war again.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
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TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
267. The EU has abolished restrictions on agricultural products traded internally.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
268. What is meant by economic integration?
ANSWER:
The term refers to the process of eliminating restrictions on international trade, payments, and
factor input mobility.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Regional Integration Versus Multilateralism
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
269. What factors influence the extent of trade creation and trade diversion?
ANSWER:
Trade creation and diversion are influenced by the degree of competitiveness that member-
nation economies have prior to formation of the customs union, the number and size of its
members, and the size of its external tariff against non-members.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
270. Explain the theory of optimum currency areas.
ANSWER:
Much of the analysis of the benefits and costs of Europe’s common currency is based on the
theory of an optimum currency area. According to this theory, the gains to be had from
sharing a currency across countries’ boundaries include more uniform prices; lower
transaction costs, greater certainty for investors, and enhanced competition. These gains must
be compared against the loss of an independent monetary policy and the option of changing
the exchange rate.
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Essay
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Economic Costs and Benefits of a Common Currency: The European Monetary Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
271. Who were the losers in the U.S. as a result of NAFTA?
ANSWER:
All labor intensive, lower wage and import-competing businesses lost from reduced tariffs on
competing imports. Workers in import competing businesses lose if their businesses close or
relocate. Agricultural producing states saw an influx of cheaper Mexican agricultural
products. The Teamsters Union did not want competition from Mexican truck drivers.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Essay
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
272. Advocates of the North American Free Trade Agreement (NAFTA) hoped that a (an) ______ in Mexican exports
would ______ the migration of labor from Mexico to the United States.
a.
b.
c.
d.
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Page 109
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:06 AM
DATE MODIFIED:
7/5/2016 5:09 AM
273. American critics of the North American Free Trade Agreement (NAFTA) thought that it could
a.
cause American workers to migrate to Mexico to find jobs
b.
cause U.S. companies to move to Mexico to benefit from lower labor costs
c.
cause Mexican companies to move to the U.S. to benefit from higher labor productivity
d.
cause Mexican companies to move to the U.S. to benefit from higher labor costs
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:09 AM
DATE MODIFIED:
7/5/2016 5:14 AM
274. American critics of the North American Free Trade Agreement (NAFTA) thought that it could cause some U.S.
companies to move to Mexico to benefit from
a.
lenient environment policies of the Mexican government
b.
high wages of Mexican workers
c.
low productivity of Mexican workers
d.
high corporate tax rates of the Mexican government
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:14 AM
DATE MODIFIED:
7/5/2016 5:16 AM
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Page 110
275. For the United States, the political debate of joining NAFTA was very intense because of Mexico’s
a.
relatively low wage levels
b.
relatively low levels of environmental enforcement
c.
relatively low standards for protecting workers
d.
all of the above
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:16 AM
DATE MODIFIED:
7/5/2016 5:18 AM
276. When the United States was considering joining NAFTA, many economists predicted that the U.S. factor of
production that would be most harmed was
a.
skilled labor
b.
unskilled labor
c.
capital
d.
entrepreneurship
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/5/2016 5:19 AM
DATE MODIFIED:
7/5/2016 5:21 AM
277. NAFTA is essentially a
a.
free trade area
b.
customs union
c.
economic union
d.
monetary union
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
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Page 111
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
DISC: International trade and finance
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/5/2016 5:34 AM
DATE MODIFIED:
7/5/2016 5:36 AM
278. A customs union that results in a sizable amount of ______ would be beneficial to global welfare.
a.
trade creation
b.
trade diversion
c.
trade restrictions
d.
trade diversification
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Effects of a Regional Trading Arrangement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:37 AM
DATE MODIFIED:
7/5/2016 5:39 AM
279. Relative to a regional trade agreement, a multilateral trade agreement may be more beneficial to global welfare in
that it entails
a.
less trade creation
b.
less trade diversion
c.
more trade diversion
d.
more trade consumption
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Regional Integration versus Multilateralism
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:39 AM
DATE MODIFIED:
7/5/2016 5:41 AM
280. In terms of static economic analysis, if a customs union results in a large amount of trade creation relative to trade
diversion, world welfare
a.
increases
b.
decreases