1. Which of the following is true of the customs union?
a. in a customs union, tariff and non-tariff barriers between the member nations are absent.
b. in a customs union, a fixed exchange rate regime is implemented among the member nations.
c. in a customs union, member nations agree to transfer economic sovereignty to a supranational authority.
d. in a customs union, the member nations do not impose any external trade restrictions against the nonmembers.
Ā
2. When the national, taxation, social, and fiscal policies of two or more nations are administered by a supranational institution, the nations are said to be a part of:
a. a common market
b. a free-trade area
c. an economic union
d. a customs union
Ā
3. The trade creation effect under a customs union is stronger if:
a. the production effect increases
b. the trade diversion effect rises
c. the inefficient domestic producers continue to operate
d. The consumption effect reduces
Ā
4. Who among the following is a loser from free trade of the U.S. with Mexico?
a. Workers in import-competing industries in the U.S
b. Workers in labor-intensive businesses relocated from the U.S. to Mexico
c. The consumer in the U.S.
d. Workers in industries that use an imported component in its production process in the U.S.
Ā
5. A major hindrance to the growth processes of developing nations is that
a.Ā they mostly adopt export-promoting industrialization policies
b. they have a dearth of low-wage workers.
c. they lack adequate institutions
d. they are not centrally planned economies
Ā
6. One of the functions of the World Bank is to
a. stipulates measures that will improve the balance of payments of a member nation
b. advances loans in foreign currencies to a member nation facing currency deficits
c. provides grants for specific development projects of a member nation.
d. review the trade policies of member nations and make necessary amendments