quiz 12 online

One of the primary concerns in the U.S. about entering into NAFTA was that:

U.S. jobs would be lost to Mexico because wage rates in Mexico were so much lower than in the U.S.

When a country imposes economic sanctions in the form of discriminatory restrictions on economic exchanges with a specific country, those economic sanctions are called

an embargo

The European Union set and largely met a goal to be a ____________________ by 1992.

common market

In the last three decades, the European Union has been moving from being a(n) ____________________ toward being a(n) ____________________.

customs union; economic union

A typical individual country can be categorized as a(n):

economic union

One deviation from the most favored nation principle that the WTO accepts is that developing countries have a right to:

exchange preferences among themselves and receive preferential access to markets in industrialized countries.

NAFTA

has eliminated nearly all tariffs and many non-tariff barriers to trade within the U.S.-Canada-Mexico trade area.

National product standards

have often been used as thinly disguised devices for protecting high-cost domestic producers against competition from lower-cost foreign producers.

MERCOSUR

is the most prominent trade bloc of developing countries.

Through the 1980's, the European Common Market (now known as the European Union) was not truly a common market because:

it did not allow free movement of labor and capital among member nations.

The primary difference between a free trade area and a customs union is that:

members of a customs union adopt a common set of external trade barriers.

If a country expects that the trade diversion effect will dominate the trade creation effect if it joins a customs union with a neighbor, the country should

not join the customs union because the country loses well-being by joining.

Because goods produced within a free trade area are entitled to be traded freely within the free trade area, determining what goods are produced within the free trade area is important and relies on:

rules of origin.

A basic WTO principle is that trade barriers:

should be lowered equally and without discrimination for all member countries.

When national markets are joined in a trade bloc, firms from countries that are members of the trade bloc must compete with each other. One of the results of this increased competition is:

that the inefficiencies of monopolies are reduced.

Trade blocs can attract more foreign direct investment into member countries because:

the market within the trade bloc is larger than the market in any of the member countries and foreign firms often seek to establish locations on the basis of market size.

An acknowledged result of NAFTA is that:

there was a substantial increase in trade among the U.S., Canada, and Mexico.

When countries band together and agree that they can import from each other freely while imposing import barriers against countries that are not part of the group, those countries have formed a:

trade bloc.

The net volume of new trade that results from forming or joining a trade bloc is:

trade creation.

As a result of joining a trade bloc, Country A finds that it is purchasing relatively more expensive cars from Country B, a fellow bloc member, rather than purchasing the less expensive cars from Country C, a trading bloc outsider. This phenomenon is called:

trade diversion