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Page 54
134. 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
135. 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
136. 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 55
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
137. 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
138. 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
139. 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
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Page 56
c.
does not change
ANSWER:
a
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:
Effects of a Regional Trading Arrangement
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/5/2016 5:41 AM
DATE MODIFIED:
7/5/2016 5:43 AM
140. In terms of static economic analysis, if a customs union results in a small amount of trade creation relative to trade
diversion, world welfare
a.
increases
b.
decreases
c.
does not change
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:
Effects of a Regional Trading Arrangement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:43 AM
DATE MODIFIED:
7/5/2016 5:47 AM
141. An objective of all of the members of the European Union (EU) has been to
a.
abolish tariff and nontariff barriers to trade among member countries
b.
adopt identical fiscal policies for all countries belonging to the EU
c.
form a customs union agreement with members of NAFTA
d.
establish a common currency and a common monetary policy
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:
The European Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:47 AM
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Page 57
DATE MODIFIED:
7/5/2016 5:49 AM
142. As of 2016, 18 members of the European Union had adopted further economic integration than the other members by
a.
abolishing tariff and nontariff barriers to trade among each other
b.
adopting uniform policies on the movement of factors of production
c.
establishing common trade policies against countries that were not members of the EU
d.
implementing a common currency and a common monetary policy
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:49 AM
DATE MODIFIED:
7/5/2016 5:51 AM
143. When the North American Free Trade Agreement was being considered, American critics argued that it would likely
result in
a.
a reduction in U.S. competitiveness against Canada
b.
a loss of American jobs to Mexico
c.
a gain in U.S. competitiveness against Mexico
d.
additional jobs for unskilled workers in the United States
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 5:51 AM
DATE MODIFIED:
7/5/2016 5:53 AM
144. If the United States and Canada implement a regional trading agreement that results in the two countries eliminating
trade barriers between themselves while maintaining separate trade barriers against nonmember countries, they have
formed a
a.
common market
b.
customs union
c.
free trade area
d.
economic union
ANSWER:
c
POINTS:
1
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DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/5/2016 5:53 AM
DATE MODIFIED:
7/5/2016 5:56 AM
145. The formation of a regional trading bloc results in trade creation if
a.
inefficient domestic production is replaced by more efficient production from another member country
b.
inefficient domestic production is replaced by more efficient production from a nonmember country
c.
member countries import more, but export less to nonmember countries
d.
member countries export less, but import more from nonmember countries
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – 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: Apply
DATE CREATED:
7/5/2016 5:56 AM
DATE MODIFIED:
7/5/2016 5:58 AM
146. Regarding stages of economic integration, a customs union
a.
goes beyond a free trade area by including a common external tariff
b.
falls short of a free trade area by excluding a common external tariff
c.
goes beyond a common market by including a common transportation policy
d.
goes beyond a common market by including a common agricultural policy
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/5/2016 5:58 AM
DATE MODIFIED:
7/5/2016 6:00 AM
147. Regarding stages of economic integration, a free trade area
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Page 59
a.
goes beyond a customs union by including a common external tariff
b.
falls short of a customs union by excluding a common external tariff
c.
goes beyond a common market by including a common transportation policy
d.
goes beyond a common market by including a common agricultural policy
ANSWER:
b
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/5/2016 6:00 AM
DATE MODIFIED:
7/5/2016 6:02 AM
148. If several countries form a regional trading pact that removes tariffs between the members, implements a common
external tariff structure, permits free mobility of factors of production, and integrates fiscal policies, they have formed a
a.
customs union
b.
economic union
c.
free trade area
d.
common market
ANSWER:
b
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/5/2016 6:02 AM
DATE MODIFIED:
7/5/2016 6:04 AM
149. The common agricultural policy of the European Union supports its farmers through a system of
a.
variable levies and export subsidies
b.
fixed import tariffs and export subsidies
c.
export subsidies and import quotas
d.
domestic content requirements
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
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Page 60
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:
7/5/2016 6:04 AM
DATE MODIFIED:
7/5/2016 6:06 AM
150. Concerning the stages of economic integration, by the early 1990s, the European Union had essentially reached the
stage of a (an)
a.
free trade area
b.
customs union
c.
common market
d.
economic union
ANSWER:
c
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – 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: Apply
DATE CREATED:
7/5/2016 6:06 AM
DATE MODIFIED:
7/5/2016 6:08 AM
151. Countries pursuing membership in the European Monetary Union (Eurozone) are supposed to meet “convergence
criteria” which include
a.
price stability
b.
low long-term interest rates
c.
sound governmental finances
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:
Economic Costs and Benefits of a Common Currency: The European Monetary Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 6:08 AM
DATE MODIFIED:
7/5/2016 6:10 AM
152. According to the theory of optimal currency areas, there are gains to be achieved from sharing a currency across
national boundaries. These gains include
a.
more uniform prices and lower transactions costs
b.
greater certainty for investors and enhanced competition
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Page 61
c.
a single monetary policy run by an independent central bank
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:
Economic Costs and Benefits of a Common Currency: The European Monetary Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 6:11 AM
DATE MODIFIED:
7/5/2016 6:12 AM
153. The theory of optimal currency areas concludes that for a currency area to have the best chance of success
a.
workers in the affected country must be able to move freely to other countries
b.
prices and wages are flexible
c.
countries should have similar business cycles and economic structures
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:
Economic Costs and Benefits of a Common Currency: The European Monetary Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 6:13 AM
DATE MODIFIED:
7/5/2016 6:14 AM
154. Advocates of the North American Free Trade Agreement (NAFTA) hoped that a rise in Mexican exports to the
United States would discourage labor migration from Mexico to the United States.
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
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 6:15 AM
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Page 62
DATE MODIFIED:
7/5/2016 6:16 AM
155. Critics of the North American Free Trade Agreement (NAFTA) feared that many Americans would migrate to
Mexico to find jobs.
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
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 6:16 AM
DATE MODIFIED:
7/5/2016 6:17 AM
156. Under NAFTA, Canada, Mexico, and the United States agreed to adopt free trade among each other, but also to fully
harmonize their fiscal and monetary policies.
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
STATE STANDARDS:
United States – PA – DISC: Monetary and fiscal policy
TOPICS:
North American Free Trade Agreement
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 6:18 AM
DATE MODIFIED:
7/5/2016 6:19 AM
157. A long-run goal of the NAFTA members is to integrate their economies into an economic and monetary union, with
common fiscal policies and monetary policies.
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
STATE STANDARDS:
United States – PA – DISC: Monetary and fiscal policy
TOPICS:
North American Free Trade Agreement
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KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 6:19 AM
DATE MODIFIED:
7/5/2016 6:21 AM
158. A free trade area and a customs union differ in the way in which member nations treat imports from nonmember
nations.
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
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 6:21 AM
DATE MODIFIED:
7/5/2016 6:22 AM
159. In terms of static economic analysis, if a customs union results in a large amount of trade diversion relative to trade
creation, world welfare declines.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
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: Remember
DATE CREATED:
7/5/2016 6:22 AM
DATE MODIFIED:
7/5/2016 6:24 AM
160. Before joining the NAFTA in 1994, Mexico adopted essentially a free-trade policy toward Canada and the United
States.
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
Copyright Cengage Learning. Powered by Cognero.
Page 64
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 6:24 AM
DATE MODIFIED:
7/5/2016 6:25 AM
161. A free trade area is like a customs union except it members adopt a common external tariff structure.
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
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 6:25 AM
DATE MODIFIED:
7/5/2016 6:27 AM
162. An optimal currency area is a region in which it is economically preferable to have a single official currency rather
than multiple official currencies.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
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:
Economic Costs and Benefits of a Common Currency: The European Monetary Union
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/5/2016 6:27 AM
DATE MODIFIED:
7/5/2016 6:29 AM
163. An advantage of the European Monetary Union (Eurozone) is that its member countries have common fiscal policies.
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
Copyright Cengage Learning. Powered by Cognero.
Page 65
STATE STANDARDS:
United States – PA – DISC: Monetary and fiscal policy
TOPICS:
Economic Costs and Benefits of a Common Currency: The European Monetary Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 6:29 AM
DATE MODIFIED:
7/5/2016 6:30 AM
164. The European Union’s variable levy is essentially a sliding-scale tariff applied to imports of agricultural products.
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
STATE STANDARDS:
United States – PA – DISC: Monetary and fiscal policy
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 6:31 AM
DATE MODIFIED:
7/5/2016 6:32 AM