Question 1

Benelux is an example of a(n) :

Accepted Answer

A)  preferential trade arrangement
B)  customs union
C)  common market
D)  economic unionE) A) and C)
F) A) and B)

Question 2

The European Union became a common market in 1993 by allowing free movement of labor and capital among member nations.

Accepted Answer

A) True 
 B)False

Question 3

When was the EFTA (European Free Trade Association) formed?

Accepted Answer

A)  1960
B)  1940
C)  1970
D)  1965E) C) and D)
F) B) and D)

Question 4

With free trade,the supply curve faced by a small importing country will be:

Accepted Answer

A)  perfectly inelastic
B)  perfectly elastic
C)  upward sloping
D)  downward slopingE) B) and C)
F) B) and D)

Question 5

List and briefly describe,from loosest to tightest,the five types of economic integration:

Accepted Answer

Preferential trade arrangements which pr...

Question 6

Trade deflection is most likely to occur in which of the following?

Accepted Answer

A)  Preferential trade agreement
B)  Customs union
C)  Free trade area
D)  Monetary unionE) A) and D)
F) A) and C)

Question 7

From the flowing diagram find out the static benefit of participating in a custom union which requires it to switch from a non-member supplier with $2 price and $1 tariff to a member supplier with $2.50 price.

Accepted Answer

Gain from trade creation = (½ ...

Question 8

______________ occur(s) when lower-cost imports from outside the union are replaced by higher-cost imports from another union member.

Accepted Answer

A)  Trade creation
B)  Trade diversion
C)  Economies of scale
D)  Increasing opportunity costsE) A) and B)
F) C) and D)

Question 9

After the customs union is formed and trade barriers among the member nations are enacted,the member nations may become less efficient due to the joined union.

Accepted Answer

A) True 
 B)False

Question 10

The agreement among the Baltic States of Estonia,Latvia,and Lithuania is known as:

Accepted Answer

A)  the Commonwealth of Independent States ( CIS) 
B)  the Central European Free Trade Association (CEFT
A)  
C)  the Baltic States Free Trade Area (BFT
A)  
D)  the European Union (EU) E) A) and B)
F) None of the above

Question 11

_______________ occurs when some domestic production in a member of the customs union is replaced by lower-cost imports from another member nation.

Accepted Answer

A)  Trade creation
B)  Trade diversion
C)  Economies of scale
D)  Decreasing returns to scaleE) A) and B)
F) A) and C)

Question 12

Which of the following significant change with respect to the development of the European Union took place in January,1993,as a result of the Single European Act?

Accepted Answer

A)  Becoming a single unified market by removing the restrictions on the free flow of goods,services,and resources among its members
B)  Adopting a common currency for the members
C)  Forming supranational fiscal and monetary agencies
D)  Becoming an economic unionE) None of the above
F) C) and D)

Question 13

In the CMEA member countries,international transactions were controlled through ___________________.

Accepted Answer

A)  duty-free zones
B)  state trading companies
C)  centrally planned economies
D)  bilateral agreementsE) A) and D)
F) B) and D)

Question 14

The British Commonwealth Preference Scheme is an example of a(n) :

Accepted Answer

A)  free trade area
B)  customs union
C)  preferential trade arrangement
D)  common marketE) A) and B)
F) A) and D)

Question 15

Why do countries engage in economics integration? Doesn't it have a reduced welfare effect as opposed to free trade?

Accepted Answer

There are two distinct types of benefits...

Question 16

At the time of the NAFTA agreement,who was the United States' largest trading partner?

Accepted Answer

A)   Canada
B)  Japan
C)  Mexico
D)  EnglandE) A) and D)
F) B) and D)

Question 17

Which of the following represents the highest form of economic integration?

Accepted Answer

A)  Customs union
B)  Common market
C)  Economic union
D)  Preferential trade arrangementsE) C) and D)
F) All of the above

Question 18

A Country will have positive static benefit from a customs union if

Accepted Answer

A)  the resulting trade diversion is significantly stronger than the resulting trade creation
B)  if the resulting trade creation is significantly stronger than the resulting trade diversion
C)  if the price of import significantly increases over the free trade price without tariff
D)  if there is significant stimulus for investmentE) A) and C)
F) None of the above

Question 19

The formation of a customs union generates static effects for members,but not dynamic effects.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not an example of dynamic benefits of the formation of customs unions?

Accepted Answer

A)  increased competition
B)  stimulus to investment
C)  better utilization of economic resources
D)  trade creation and trade diversionE) All of the above
F) B) and C)

Exam 7: Economic Integration

With free trade,the supply curve faced by a small importing country will be:

Correct AnswerverifiedShow Answer

List and briefly describe,from loosest to tightest,the five types of economic integration:

Correct AnswerverifiedPreferential trade arrangements which pr...View AnswerShow Answer

______________ occur(s) when lower-cost imports from outside the union are replaced by higher-cost imports from another union member.

Correct AnswerverifiedShow Answer

The agreement among the Baltic States of Estonia,Latvia,and Lithuania is known as:

Correct AnswerverifiedShow Answer

The formation of a customs union generates static effects for members,but not dynamic effects.

Correct AnswerverifiedShow Answer

In the CMEA member countries,international transactions were controlled through ___________________.

Correct AnswerverifiedShow Answer

The European Union became a common market in 1993 by allowing free movement of labor and capital among member nations.

Correct AnswerverifiedShow Answer

When was the EFTA (European Free Trade Association) formed?

Correct AnswerverifiedShow Answer

Which of the following represents the highest form of economic integration?

Correct AnswerverifiedShow Answer

Trade deflection is most likely to occur in which of the following?

Correct AnswerverifiedShow Answer

The British Commonwealth Preference Scheme is an example of a(n) :

Correct AnswerverifiedShow Answer

At the time of the NAFTA agreement,who was the United States' largest trading partner?

Correct AnswerverifiedShow Answer

Which of the following is not an example of dynamic benefits of the formation of customs unions?

Correct AnswerverifiedShow Answer

Why do countries engage in economics integration? Doesn't it have a reduced welfare effect as opposed to free trade?

Correct AnswerverifiedThere are two distinct types of benefits...View AnswerShow Answer

A Country will have positive static benefit from a customs union if

Correct AnswerverifiedShow Answer

From the flowing diagram find out the static benefit of participating in a custom union which requires it to switch from a non-member supplier with $2 price and $1 tariff to a member supplier with $2.50 price.

Correct AnswerverifiedGain from trade creation = (½ ...View AnswerShow Answer

After the customs union is formed and trade barriers among the member nations are enacted,the member nations may become less efficient due to the joined union.

Correct AnswerverifiedShow Answer

Which of the following significant change with respect to the development of the European Union took place in January,1993,as a result of the Single European Act?

Correct AnswerverifiedShow Answer

Benelux is an example of a(n) :

Correct AnswerverifiedShow Answer

_______________ occurs when some domestic production in a member of the customs union is replaced by lower-cost imports from another member nation.

Correct AnswerverifiedShow Answer

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Preferential trade arrangements which pr...
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There are two distinct types of benefits...
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Gain from trade creation = (½ ...
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