Question 1

Why may a single market cause adverse regional effects?

Accepted Answer

Firms are likely to locate as near as po...

Question 2

What are some of the possible disadvantages of a customs union?

Accepted Answer

• The free movement of capital and labou...

Question 3

If increased economic integration causes more co- operation between firms, this could cause

Accepted Answer

A)   more elastic demand curves.
B)   greater oligopolistic collusion.
C)   industry output to rise.
D)   consumer surplus to rise.

Question 4

Assume that, before it joined the EU, the UK had to pay a tariff on Granny Smith apples imported from France. The UK grows both Coxes apples and Granny Smith apples but it is France that has a comparative advantage in the latter. When the UK joined the EU, one would have expected to see the UK

Accepted Answer

A)   increase its imports and reduce its production of Granny Smiths.
B)   reduce its imports and increase its production of Granny Smiths.
C)   increase its exports of Granny Smiths and reduce its imports of Coxes.
D)   reduce its exports of Granny Smiths and increase its imports of Coxes.

Question 5

The European Economic Area is a

Accepted Answer

A)   common market.
B)   single market.
C)   customs union.
D)   free trade area. C

Question 6

Increased competition between member states of the EU should lead to increases in consumer surplus.

Accepted Answer

A) True 
 B)False

Question 7

The act signed in 1992 to establish a true common market of countries in Europe was called the

Accepted Answer

A)   European Union Act.
B)   Single European Act.
C)   European Community Act.
D)   Single Market Act.

Question 8

Which of the following was not a prime aim of the EEC on its foundation?

Accepted Answer

A)   To allow greater economies of scale to be gained in production and consumption
B)   To avoid another war by uniting countries within Europe
C)   To provide effective competition against the economic giant of the US
D)   To bring a greater awareness of the different cultures of the member countries and to foster cultural and educational links between them

Question 9

NAFTA is a_______, whereas the EU is a _______________.

Accepted Answer

A)   free trade area; single market
B)   free trade area; customs union
C)   common market; single market
D)   common market; customs union

Question 10

The purpose of the North American Free Trade Association (NAFTA)  is to

Accepted Answer

A)   speed up the transfer of technology between the US, Canada and Mexico.
B)   reduce trade barriers between the US, Canada and Mexico.
C)   reduce the amount the US imports from Canada and Mexico.
D)   reduce the US's dependency on imported oil.

Question 11

Which of the following is estimated to yield the greatest monetary benefit to the European Union when trade barriers are removed?

Accepted Answer

A)   The reaping of economies of scale by industries
B)   Removal of all industrial barriers
C)   Cessation of national procurement policies by government
D)   Removal of frontier formalities

Question 12

What is the significance of NAFTA (North American Free Trade Agreement)?

Accepted Answer

After the EU, NAFTA is the largest tradi...

Question 13

Which of the following is the least likely to be the result of the formation of a trading bloc?

Accepted Answer

A)   Larger markets for domestic companies
B)   Greater specialisation among member countries
C)   More scope for member countries to develop economies of scale
D)   New export markets for less developed countries D

Question 14

The existing members of the EU are likely to benefit more than the new entrants to the EU.

Accepted Answer

A) True 
 B)False

Question 15

A common market is when countries operate together having free movement of labour and capital and similar trade laws.

Accepted Answer

A) True 
 B)False

Question 16

In which year were all tariffs between NAFTA members eliminated?

Accepted Answer

A)   2008
B)   2011
C)   2009
D)   2010 A

Question 17

Which of the following is a barrier to trade, as viewed by the European Council?

Accepted Answer

A)   Introduction of country- specific technical standards
B)   Total transport cost being higher when long distances are involved
C)   Language barriers
D)   Consumers preferring locally produced products

Question 18

Name as many of the EU member states as you can.

Accepted Answer

1) Austria
2) Belgium
3) Bulgaria
4) Cro...

Question 19

A customs union is more likely to lead to trade diversion rather than trade creation when the union's external tariff is very_______ and there is ________between goods produced within and outside the union.

Accepted Answer

A)   high; no cost difference
B)   low; a substantial cost difference
C)   high; a substantial cost difference
D)   low; no cost difference

Question 20

Assume that, before it joined the EU, UK consumers had to pay a tariff on imported Fiat cars. The UK's main small car at the time was the Mini. Italy had a comparative advantage in the production of small cars. On joining the EU, the UK car market would have seen

Accepted Answer

A)   trade reduction.
B)   trade diversion.
C)   trade division.
D)   trade creation.

Exam 25: Trading Blocs

Why may a single market cause adverse regional effects?

Correct AnswerverifiedFirms are likely to locate as near as po...View AnswerShow Answer

What are some of the possible disadvantages of a customs union?

Correct Answerverified• The free movement of capital and labou...View AnswerShow Answer

If increased economic integration causes more co- operation between firms, this could cause

Correct AnswerverifiedShow Answer

Assume that, before it joined the EU, the UK had to pay a tariff on Granny Smith apples imported from France. The UK grows both Coxes apples and Granny Smith apples but it is France that has a comparative advantage in the latter. When the UK joined the EU, one would have expected to see the UK

Correct AnswerverifiedShow Answer

The European Economic Area is a

Correct AnswerverifiedC

Increased competition between member states of the EU should lead to increases in consumer surplus.

Correct AnswerverifiedShow Answer

The act signed in 1992 to establish a true common market of countries in Europe was called the

Correct AnswerverifiedShow Answer

Which of the following was not a prime aim of the EEC on its foundation?

Correct AnswerverifiedShow Answer

NAFTA is a_______, whereas the EU is a _______________.

Correct AnswerverifiedShow Answer

The purpose of the North American Free Trade Association (NAFTA) is to

Correct AnswerverifiedShow Answer

Which of the following is estimated to yield the greatest monetary benefit to the European Union when trade barriers are removed?

Correct AnswerverifiedShow Answer

What is the significance of NAFTA (North American Free Trade Agreement)?

Correct AnswerverifiedAfter the EU, NAFTA is the largest tradi...View AnswerShow Answer

Which of the following is the least likely to be the result of the formation of a trading bloc?

Correct AnswerverifiedD

The existing members of the EU are likely to benefit more than the new entrants to the EU.

Correct AnswerverifiedShow Answer

A common market is when countries operate together having free movement of labour and capital and similar trade laws.

Correct AnswerverifiedShow Answer

In which year were all tariffs between NAFTA members eliminated?

Correct AnswerverifiedA

Which of the following is a barrier to trade, as viewed by the European Council?

Correct AnswerverifiedShow Answer

Name as many of the EU member states as you can.

Correct Answerverified1) Austria2) Belgium3) Bulgaria4) Cro...View AnswerShow Answer

A customs union is more likely to lead to trade diversion rather than trade creation when the union's external tariff is very_______ and there is ________between goods produced within and outside the union.

Correct AnswerverifiedShow Answer

Assume that, before it joined the EU, UK consumers had to pay a tariff on imported Fiat cars. The UK's main small car at the time was the Mini. Italy had a comparative advantage in the production of small cars. On joining the EU, the UK car market would have seen

Correct AnswerverifiedShow Answer

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Firms are likely to locate as near as po...
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• The free movement of capital and labou...
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C

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NAFTA is a_, whereas the EU is a _________.

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After the EU, NAFTA is the largest tradi...
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D

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A

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1) Austria
2) Belgium
3) Bulgaria
4) Cro...
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A customs union is more likely to lead to trade diversion rather than trade creation when the union's external tariff is very_ and there is __between goods produced within and outside the union.

Correct Answer
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