The European Union is primarily intended to permit the _____ among member nations. Formation of a customs union Establishment of a common currency Implementation of a common fiscal policy Free movement of resources and products

Free movement of resources and products

According to customs union theory, when will the formation of a customs union decrease members' real welfare? When there is no trade creation When the trade creation effect exceeds the trade diversion effect When the trade diversion effect exceeds the trade creation effect When there is no trade diversion

When the trade diversion effect exceeds the trade creation effect

Understanding Economic Integration and Trade Agreements Flashcards

What occurs when Mexico and Canada form a free trade area, and Canada begins importing steel from Mexico rather than from Germany?

The European Union is primarily intended to permit the _____ among member nations.

Which of the following represents the stage where economic integration is most complete?

Which of the following represents the stage where economic integration is least complete?

According to customs union theory, when will the formation of a customs union decrease members' real welfare?

Which economic integration scheme is solely intended to abolish trade restrictions among member countries while setting up common tariffs against nonmembers?

By 1992, the European Union had become a full-fledged _____, allowing free movement of goods, services, capital, and labor.

Which device has the European Union used to equalize farm-product import prices with politically determined EU prices, regardless of shifts in world prices?

Which trade instrument has the European Union used to insulate its producers and consumers of agricultural goods from the impact of changing demand and supply conditions in the rest of the world?

Assume that the formation of a customs union includes the lowest-cost world producer of a product. Which effect could NOT occur for the participating countries?

Which organization of nations permits free trade among its members in industrial goods, while each member maintains freedom in its trade policies toward nonmember countries?

Which of the following organizations is considered a regional trading agreement?

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):

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 static welfare effect resulting from the formation of the European Union would be:

A dynamic welfare gain resulting from the formation of the European Union would be:

Which organization was founded in 1957 with the objective of creating an economic union among its members?

The common agriculture policy of the European Union has supported European farmers via:

Which nation is NOT a member of the North American Free Trade Association?

The North American Free Trade Association is a:

Under the European Union's common agricultural policy, a variable import levy equals the:

Members of the European Union find that 'trade creation' is fostered when their economies are:

The European Union has achieved all of the following EXCEPT:

When the United States, Canada, and Mexico form a free trade area, and Mexico begins importing a product from Canada rather than from the lowest-cost world producer, _____ occurs.

When the formation of a free trade area results in the reduction of trade with nonmember nations in favor of member countries, _____ occurs.

Which country is NOT a member of the European Union?

The implementation of the European Union has _____ for Americans competing against Germans in the British market.

The common agricultural policy of the European Union has _____ American farm exports to the EU.

The implementation of a common market involves all of the following EXCEPT:

Under the common agricultural policy, exports of any surplus quantities of European Union produce are encouraged through the usage of:

Consider Figure 8.1. With free trade, Greece imports _____ from Germany.

Consider Figure 8.1. Assume Greece levies a per-unit tariff of $20 on imports from both Germany and France. Greece will import _____ from Germany.

Consider Figure 8.1. Assume Greece levies a per-unit tariff of $20 on imports from both Germany and France. As a result of the $20 tariff, Greece's consumer surplus falls by _____ dollars.

Consider Figure 8.1. Assume Greece levies a per-unit tariff of $20 on imports from both Germany and France. The deadweight welfare loss to Greece resulting from the $20 tariff equals _____ dollars.

Referring to Figure 8.1, suppose Greece forms a customs union with France. Greece will import _____ at a per-unit price of $30.

Consider Figure 8.1. The value of the trade diversion effect, resulting from the Greece/France customs union, equals _____ dollars.

When should you use countries in relation to union and common?

Consider Figure 8.1. Comparing the trade creation and trade diversion effects, the impact of the Greece/France customs union on the welfare of Greece is _____ in economic welfare.

Consider Figure 8.1. Suppose Greece had formed a customs union with Germany rather than France. The value of the trade diversion effect would be _____ dollars.

According to Figure 8.1, the formation of a Greece/Germany customs union would result in _____ of trade creation.

In 1989, Canada and the United States agreed to implement a _____ over a ten-year period.

In the United States, the proposed North American Free Trade Agreement was generally supported by _____ firms.

At the Maastricht Summit of 1991, European Union negotiators called for the pursuit of a _____ union.

By removing discriminatory government procurement laws within the European Union, member nations hoped to benefit from all of the following EXCEPT:

Suppose that government procurement liberalization results in the U.K. government importing automobiles from Germany, the low-cost EU manufacturer. Cost savings could result from all of the following EXCEPT:

Suppose that steel from Japan faces a 20 percent tariff in France and a 25 percent tariff in Italy, while France and Italy maintain free trade between each other. France and Italy are therefore part of a (an) _____

Suppose that Mexico and Canada form a free trade area. Mexicans then decrease auto manufacturing and increase imports of autos from Canada, while the Canadians decrease computer production and import more computers from Mexico. This is an example of:

If the United States and Canada abolish all tariffs on each other's goods and implement a common tariff on goods imported from other countries, there occurs a (an) _____

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) _____

The North American Free Trade Agreement was expected to benefit _____ the most.

The North American Free Trade Agreement was most strongly opposed by U.S. _____

In the United States, which group was most likely to be hurt by the North American Free Trade Agreement?

By joining the North American Free Trade Agreement, the United States, Canada, and Mexico would find their short-run welfare decreasing because of the _____ effect.

When Mexico became a part of the North American Free Trade Agreement, along with Canada and the United States, it _____

Among the benefits that a regional trading arrangement can provide are all of these EXCEPT:

Regarding the benefits of the regional trade agreements, which of the following is not a benefit?

Smaller nations may seek safe haven trading arrangements with larger nations when future access to that market seems uncertain. This was a reason for the formation of _____

As new regional trading arrangements are formed, the opportunity cost of remaining outside _____

Regarding the interests of a nonmember nation of a regional trading agreement, the exporting interests of the nonmember nation outweigh its _____ interests.

The World Trade Organization's efforts to promote trade liberalization globally _____

All of the following are factors mitigating against global trade liberalization EXCEPT:

Regarding a common market, which of the following is true?

The United States serves as an example of a _____

The task of creating an economic union is _____

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 _____

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 _____

As of 2002, members of the European Monetary Union agreed to replace their currencies with the _____

The formation of the European Monetary Union is expected to entail benefits for member countries which include all of the following EXCEPT:

According to the theory of optimum currency areas, a currency area has the least chance for success when _____

A main disadvantage of the European Monetary Union is that each member country loses the use of _____ as a tool to combat recession.

World welfare under a customs union _____ because of a trade diversion effect.

The gains from having an optimum currency include _____

A common market _____ and allows the imposition of common external trade barriers against nonmembers.

Luxembourg is NOT a member of _____

Consider Figure 8.2. With free trade, Portugal will import _____ tons of steel from Germany at $200 per ton and 0 tons from France.

Consider Figure 8.2. With free trade, Portugal will produce _____ tons of steel, consume 35 tons of steel, and import 25 tons of steel.

Advocates of the North American Free Trade Agreement hoped that a (an) _____ in Mexican exports would _____ the migration of labor from Mexico to the United States.

American critics of the North American Free Trade Agreement thought that it could _____

American critics of the North American Free Trade Agreement thought that it could cause some U.S. companies to move to Mexico to benefit from _____

For the United States, the political debate of joining NAFTA was very intense because of Mexico's _____

When the United States was considering joining NAFTA, many economists predicted that the U.S. factor of production that would be most harmed was _____

NAFTA is essentially a _____

A customs union that results in a sizable amount of _____ would be beneficial to global welfare.

Relative to a regional trade agreement, a multilateral trade agreement may be more beneficial to global welfare in that it entails _____

In terms of static economic analysis, if a customs union results in a large amount of trade creation relative to trade diversion, world welfare _____

In terms of static economic analysis, if a customs union results in a small amount of trade creation relative to trade diversion, world welfare _____

An objective of all of the members of the European Union has been to _____

As of 2016, 18 members of the European Union had adopted further economic integration than the other members by _____

When the North American Free Trade Agreement was being considered, American critics argued that it would likely result in _____

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 _____

The formation of a regional trading bloc results in trade creation if _____

Regarding stages of economic integration, a customs union _____

Regarding stages of economic integration, a free trade area _____

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 _____

The common agricultural policy of the European Union supports its farmers through a system of _____

Concerning the stages of economic integration, by the early 1990s, the European Union had essentially reached the stage of a (an) _____

Countries pursuing membership in the European Monetary Union (Eurozone) are supposed to meet 'convergence criteria,' which includes _____

According to the theory of optimal currency areas, there are gains to be achieved from sharing a currency across national boundaries. These gains include _____

The theory of optimal currency areas concludes that for a currency area to have the best chance of success, countries should have _____

Understanding Economic Integration and Trade Agreements

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