Deck 10: Regional Economic Arrangements

Question 1

The following figure illustrates Country A's domestic market for a specific imported good.


-With free trade Country A imports:

A) Q¹ to Q⁹ from Country B.
B) Q² to Q⁸ from Country C.
C) Q³ to Q⁷ from Country B.
D) Q⁴ to Q⁶ from Country C.

Answer 1

Q¹ to Q⁹ from Country B.

Question 2

The following figure illustrates Country A's domestic market for a specific imported good.


-Suppose Country A forms a customs union with Country B, Country A will import:

A) Q¹ to Q⁹ from Country B.
B) Q² to Q⁸ from Country C.
C) Q³ to Q⁷ from Country B.
D) Q⁴ to Q⁶ from Country C.

Answer 2

Q¹ to Q⁹ from Country B.

Question 3

The following figure illustrates Country A's domestic market for a specific imported good.


-Suppose Country A forms a customs union with Country C, Country A will import:

A) Q¹ to Q⁹ from Country B.
B) Q² to Q⁸ from Country C.
C) Q³ to Q⁷ from Country B.
D) Q⁴ to Q⁶ from Country C.

Answer 3

Q² to Q⁸ from Country C.

Question 4

What is the difference between a free-trade area and a customs union?

Question 5

Describe how trade deflection occurs when countries form a free-trade area.

Question 6

List and describe the features of an economic union.

Question 7

List the reasons that rules of origin are necessary for imports.

Question 8

Suppose that you were given the task of determining the effects on imports of a preferential trade agreement for a particular industry. In general terms, how would you estimate the effects on trade and employment in the industry?

Question 9

What is a foreign trade zone? How do businesses use them as a part of engaging in international trade?

Question 10

Why is trade diversion considered harmful to world welfare?

Question 11

Why has the CAP caused friction in international trade relations between the U.S. and the EU?

Question 12

What are the major differences between the history and structure of the EU and NAFTA?

Question 13

Describe MERCOSUR and discuss its development.

Question 14

Describe the relationship between RTAs and MTNs in terms of substitutes and complements.