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Page 21
d.
Economic union
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
49. Suppose that the United Kingdom and Italy abolish all tariffs on each other’s goods and all restrictions on movements
of factors of production between them. They also implement a common protectionist policy toward other countries. This
is an example of a (an):
a.
Free-trade area
b.
Customs union
c.
Common market
d.
Economic union
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
50. The North American Free Trade Agreement was expected to benefit ____ the most.
a.
Canada
b.
Mexico
c.
Greenland
d.
United States
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
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Page 22
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
51. The North American Free-Trade Agreement was most strongly opposed by U.S.:
a.
Electronics manufacturers
b.
Labor unions
c.
Commercial banks
d.
Engineering companies
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
52. In the United States, which group was most likely to be hurt by the North American Free Trade Agreement?
a.
Unskilled labor
b.
Skilled labor
c.
Owners of capital equipment
d.
Owners of financial capital
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
53. By joining NAFTA, the United States, Canada, and Mexico would find their short-run welfare decreasing due to the:
a.
Economies of scale effect
b.
Business investment effect
c.
Trade creation effect
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Page 23
d.
Trade diversion effect
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
54. When Mexico became a part of NAFTA, along with Canada and the United States, it:
a.
Eliminated tariffs against Canada and the United States but maintained them against nonmembers
b.
Eliminated tariffs against Canada, the United States, and all nonmember countries
c.
Increased tariffs against Canada the United States, and all nonmember countries
d.
Increased tariffs against Canada and the United States, but did not change them against nonmember countries
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
55. Among the benefits that a regional trading arrangement can provide are all of these EXCEPT:
a.
economies of large scale production
b.
specialization fostering
c.
attracting foreign investment
d.
a shorter production time
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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:
Impetus for Regionalism
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Page 24
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
56. Regarding the benefits of regional trade agreements, which of the following is NOT a benefit?
a.
regional trade agreements may help manage immigration flows
b.
regional trade agreements promote regional security
c.
regional trade agreements may help lock in policy shifts towards market oriented reform
d.
regional trade agreements may promote democracy
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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:
Impetus for Regionalism
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
57. Smaller nations may seek safe haven trading arrangements with larger nations when future access to that market seems
uncertain. This was reason for the formation of:
a.
WTO
b.
GATT
c.
NAFTA
d.
none of these
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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:
Impetus for Regionalism
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
58. As new regional trading arrangements are formed, the opportunity cost of remaining outside:
a.
increases
b.
decreases
c.
remains stable
d.
none of these
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Page 25
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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:
Impetus for Regionalism
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
59. Regarding the interests of a nonmember nation of a regional trading agreement:
a.
the exporting interests of the nonmember nation outweigh its import competing interests
b.
the import competing interests of the nonmember nation outweigh its exporting interests
c.
the nonmember nation will have a better negotiating position
d.
the nonmember nation has no interest in the regional trading arrangement
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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:
Impetus for Regionalism
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
60. The WTO’s efforts to promote trade liberalization globally:
a.
have become easier
b.
have become more difficult
c.
have remained stable
d.
none of these is correct
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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
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Page 26
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
61. All of the following are factors mitigating against global trade liberalization EXCEPT:
a.
regional trading arrangements may limit trade liberalization with outsiders
b.
a small nation might do better entering into a pact with a larger nation, rather than competing globally
c.
trading bloc members may not realize economies of scale through global liberalization
d.
trading bloc members prefer competing globally rather than locally
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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: Analyze
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
62. Regarding a common market, which of the following is true?
a.
permits the free movement of goods and service among members
b.
exercises common external trade restrictions against outsiders
c.
represents a more complete integration of member nations than a customs union
d.
all of these are true
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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:
Transition Economies
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
63. The United States serves as an example of:
a.
a common market
b.
a common union
c.
a monetary union
d.
a free trade area
ANSWER:
c
POINTS:
1
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Page 27
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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:
Types of Regional Trading Agreements
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
64. The task of creating an economic union is:
a.
difficult
b.
relatively easy
c.
similar to creating a customs union
d.
None of the above
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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:
Types of Regional Trading Agreements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
65. Suppose that Canada has domestic firms that could supply its entire market for radios at a price of $50, while U.S.
firms could supply radios at $40 and Mexico at $30. Suppose that Canada initially has a 50 percent tariff on imports of
radios and then forms a free trade area with the United States. As a result, Canada realizes:
a.
Trade creation, no trade diversion, and overall welfare gains
b.
Trade creation, no trade diversion, and overall welfare losses
c.
Trade diversion, no trade creation, and potential overall welfare losses
d.
Trade diversion, trade creation, and potential overall welfare gains
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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: Understand
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Page 28
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
66. Suppose that Canada has domestic firms that could supply its entire market for radios at a price of $50, while U.S.
firms could supply radios at $40 and Mexico at $30. Suppose that Canada initially has a 50 percent tariff on imports of
radios and then forms a free trade area with Mexico. As a result, Canada realizes:
a.
Trade creation, no trade diversion, and overall welfare gains
b.
Trade creation, no trade diversion, and overall welfare losses
c.
Trade diversion, no trade creation, and potential overall welfare losses
d.
Trade diversion, trade creation, and potential overall welfare gains
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
67. As of 2002, members of the European Monetary Union agreed to replace their currencies with the:
a.
mark
b.
dollar
c.
franc
d.
euro
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
68. The formation of the European Monetary Union is expected to entail benefits for member countries which include all
of the following except:
a.
Greater certainty for investors within the EMU
b.
Lower costs of transactions within the EMU
c.
Independent monetary policies run by the central bank of each member country
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Page 29
d.
Enhanced competition among companies in member countries
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
69. According to the theory of optimum currency areas, a currency area has the least chance for success when:
a.
Countries of the currency area have differing business cycles
b.
Workers have a high degree of mobility across borders of the currency area
c.
Prices and wages can be adjusted in response to economic disturbances
d.
A single monetary policy affects all member countries in the same manner
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
70. A main disadvantage of the European Monetary Union is that:
a.
Each member country loses the use of monetary policy as to tool to combat recession
b.
There is a high degree of labor mobility among the member countries
c.
Prices are highly flexible in response to changing economic conditions
d.
Wages are highly flexible in response to changing economic conditions
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
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Page 30
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
71. World welfare under a customs union
a.
Increases due to a trade creation effect
b.
Decreases due to a trade diversion effect
c.
Depends on the relative strength of the trade creation effect and the trade diversion effect
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
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: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
72. A common market
a.
Allows the imposition of common external trade barriers against non-members
b.
Represents less economic integration than a free trade area
c.
Does not permit free movement of goods among member nations
d.
Does not allow free movement of factors of production among nations
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
73. The gains from having an optimum currency include
a.
Price differentiation
b.
Lower competition
c.
Lower transaction costs
d.
Both b and c
ANSWER:
c
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Page 31
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
74. Luxembourg is a member of:
a.
a free trade area
b.
a monetary union
c.
Benelux
d.
Both a and c
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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:
Types of Regional Trading Agreements
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
The figure below depicts the steel market for Portugal, a small nation that is unable to affect the world price. Assume that
Germany and France can supply steel to Portugal at a price of $200 and $300 respectively.
Figure 8.2. Portugal’s Steel Market
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Page 32
75. Consider Figure 8.2. With free trade Portugal will
a.
import 0 tons of steel for Germany and 15 tons of steel from France at $300 per ton
b.
import 25 tons of steel from Germany at $200 per ton and 15 tons of steel from France at $300 per ton
c.
import 15 tons of steel from Germany at $200 per ton and 10 tons of steel from France at $200 per ton
d.
import 25 tons of steel from Germany at $200 per ton and 0 tons from France
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Figure 8.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
76. Consider Figure 8.2. With free trade Portugal will
a.
produce 10 tons of steel, consume 35 tons of steel and import 25 tons of steel
b.
produce 15 tons of steel, consume 30 tons of steel and import 15 tons of steel
c.
produce 0 tons of steel, consume 35 tons of steel and import 35 tons of steel
d.
produce 15 tons of steel, consume 35 tons of steel and import 20 tons of steel
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Figure 8.2
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Page 33
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
77. Consider Figure 8.2. With free trade, Portugal will import 25 tons of steel from Germany at a price of $200 per ton.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Figure 8.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
78. Consider Figure 8.2. With free trade, Portugal produces 15 tons of steel, consumes 30 tons of steel, and imports 15
tons of steel.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Figure 8.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
79. Consider Figure 8.2. If Portugal levies a 100 percent nondiscriminatory tariff on its steel imports, it will purchase 5
tons of steel from France at a price of $500 per ton.
a.
True
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Page 34
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Figure 8.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
80. Consider Figure 8.2. If Portugal forms a customs union with France, the resulting trade-creation effect equals $500.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Figure 8.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
81. Consider Figure 8.2. If Portugal forms a customs union with France, the resulting trade-diversion effect equals $400.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Figure 8.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Analyze
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Page 35
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
82. Consider Figure 8.2. As a result of a customs union formed with France, Portugal’s overall welfare rises by $900.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Figure 8.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
83. Consider Figure 8.2. If Portugal had formed a customs union with Germany, Portugal’s welfare would have decreased
by $500.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Figure 8.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Reading and interpreting g – DISC: Reading and interpreting
graphs
TOPICS:
The European Union
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
84. The European Union protects its agricultural producers from import competition by the use of tariff rates that vary
directly with world prices.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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Page 36
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
85. Under the variable levy system of the European Union, EU farmers are protected against import competition by tariffs
that vary inversely with the world price.
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
86. Trade creation tends to more than offset trade diversion for a home country forming a customs union with partner
countries when: (1) the tariff rate in the home country is high prior to the formation of the customs union; (2) there are a
large number of countries forming the customs union.
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
87. If Chile and Mexico form a free-trade agreement, the welfare of the two countries will necessarily increase.
a.
True
b.
False
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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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
88. If Chile and Mexico abolish all tariffs on each other’s products while maintaining their own tariffs against other
countries, these two countries have formed a customs union.
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
89. With a preferential trading arrangement, a group of countries agrees to unilaterally reduce tariffs applied to imports
from all countries of the world.
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
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90. Economic integration is the process of eliminating restrictions on international trade, payments, and factor mobility.
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
91. When a group of countries establish a free-trade area, they achieve the highest 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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
92. A free-trade area is an association of trading countries whose members agree to remove all trade restrictions among
themselves, while each member country imposes identical trade restrictions against nonmember countries.
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:
Types of Regional Trading Arrangements
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KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
93. If the United Kingdom and Italy eliminate all tariffs on each other’s goods and all restrictions to factor movements
between them, and implement a uniform system of import restrictions against the rest of the world, these countries have
formed a common market.
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
94. The highest stage of economic integration is a monetary union.
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
95. Trade creation would occur if Canada and the United States form a free-trade area, and Canadians then import less
steel from the United States while importing more steel from Japan.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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Page 40
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
96. Suppose that Mexico and Canada form a free-trade area. The Mexicans then decrease refrigerator manufacturing and
increase imports of refrigerators from Canada, while the Canadians decrease auto manufacturing and import more autos
from Mexico. This is an example of trade creation.
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:
Types of Regional Trading Arrangements
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
97. Trade creation and trade diversion refer to the short run (static) effects of economic integration while economies of
scale, stimulus to investment, and effects on competition refer to the long run (dynamic) effects.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
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: Understand
DATE CREATED:
6/22/2016 3:21 PM
DATE MODIFIED:
6/22/2016 3:21 PM
98. For countries forming a customs union, the trade-creation effect represents a welfare loss and the trade-diversion
effect represents a welfare gain.
a.
True