58 Questions
Which type of economic integration involves the free movement of factors such as labor and capital, and the removal of physical, technical, and fiscal barriers?
Common Market
Which type of economic integration involves the adoption of a common external tariff on trade with non-members?
Custom Union
Which organization is a free trade area and does not envisage political integration?
European Free Trade Association
Which type of enterprises mainly drove international sourcing?
Manufacturing enterprises
What was the main motivation for international sourcing?
To focus on core business
What was the most common type of functions and services sourced abroad?
Administrative and management functions
What is the effect of market integration on consumer welfare?
Consumers get better off
What is the effect of a price rise on producers?
Producers get better off
What is the net effect of the reduction of a constant tariff on imports?
Some agents in Home get better off while others get worse off
What is the demand curve based on?
Marginal utility (MU)
What is consumer surplus?
The triangle between demand curve and price paid
What is producer surplus?
The triangle between marginal cost curve and price received
What happens to consumer surplus when price rises?
It decreases
What does the foreign supply curve look like for a small country?
It is a horizontal line
What is the 'gravity model of trade'?
A model that explains the impact of distance and GDP on trade flows.
What is the rationale for World Trade Organization (WTO) tariff-cutting negotiations?
To ensure that protections by all nations do not result in a worse-than-zero-sum game.
What is the net change in welfare for a country that removes tariffs on a partner according to the text?
It is unclear whether the net change is positive or negative.
What is the impact of EU economic integration on trade among member states according to the text?
It has pushed trade among member states.
What is the main goal of a Regional Trade Agreement (RTA)?
To promote trade and investment between members
What is the difference between a Free Trade Area (FTA) and a Common Market?
FTAs allow for free movement of factors of production, while Common Markets do not
Which of the following is a characteristic of the European Union (EU)?
It coordinates economic policies
What is the impact of EU integration on trade and welfare among EU-15 countries?
Trade increased by 70% and welfare by 3.1%
What is the principle of 'Most Favoured Nation (MFN)' according to the World Trade Organization (WTO)?
The most favourable treatment granted to a product imported from any country should be given to a product from any Member of the WTO
What is the Common Customs Tariff (CCT)?
A tariff applied to the import of goods across the external borders of the EU
What are Technical Barriers to Trade (TBTs)?
Trade barriers that are frictional and include excessive red tape and industrial standards
What is the objective of enterprises organizing their production globally and breaking up their value chains into smaller parts supplied by a growing number of providers located worldwide?
Improved production efficiency and competitiveness
What are RTAs?
Reciprocal trade agreements between two or more partners
What is the main criticism of preferential integration?
It limits global trade liberalization due to high external trade barriers
What is the cornerstone of short run trade effects of economic integration?
Trade creation and trade diversion
What are the four modes of supply under GATS?
Cross-border supply, consumption abroad, commercial presence, and presence of a natural person
Which type of enterprises were mainly driving international sourcing according to the text?
Manufacturing enterprises
What was the main factor influencing international sourcing according to the text?
Proximity
What was the effect of international sourcing on employment according to the text?
Direct employment consequences were limited
What is the net change in welfare for a country that removes tariffs on a partner according to the text?
Negative
What is the rationale behind World Trade Organization (WTO) tariff-cutting negotiations according to the text?
To benefit all nations
What are the two key variables that the geographical structure of trade flows depend on according to the text?
Distance between countries and size of the importer country
What is the deep trade integration among EU-15 according to the text?
Trade integration among member states
What is the main objective of Regional Trade Agreements (RTAs)?
To increase economic and political interdependence among member states
Which of the following is a necessary condition for RTAs to be tolerated by the GATT under the MFN clause exception?
Intra-bloc tariffs must go to zero within a reasonable period
What is the main criticism of preferential integration?
It limits global trade liberalization
What are the four modes of supply under the General Agreement on Trade in Services (GATS)?
Cross-border supply, consumption abroad, commercial presence, and natural person presence
What is the main difference between the European Union and the European Free Trade Association?
The European Union involves political integration while the European Free Trade Association does not
What is the Common Customs Tariff (CCT)?
A tariff applied to the import of goods across the external borders of the EU
What are Technical Barriers to Trade (TBTs)?
Trade barriers that are not based on rents, such as excessive 'red-tape' and industrial standards
What is the objective of enterprises organizing their production globally and breaking up their value chains into smaller parts supplied by a growing number of providers located worldwide?
To improve production efficiency and competitiveness
What is the impact of integration effects on trade shares among the EU-15 according to the text?
Increased by 70%
What is the difference between consumer surplus and producer surplus?
Consumer surplus is the difference between marginal utility and price paid, while producer surplus is the difference between marginal cost and price received
What is the impact of a price rise on consumer and producer surplus?
A price rise decreases consumer surplus and increases producer surplus
What is the assumption made about Home country in the context of foreign supply?
Home country is a price taker, meaning that no matter it imports, the price is the same
What is the impact of a tariff on imports imposed by Home country before integration with the Partner?
The tariff increases the price of imports from the Rest of the world (RoW) and decreases the quantity imported from RoW
What is the difference between a Free Trade Area (FTA) and a Customs Union (CU)?
FTAs involve the removal of tariffs between member countries, while CUs involve the adoption of a common external tariff on trade with non-members.
What is the impact of Preferential Trade Agreements (PTAs) on third countries?
PTAs can have both trade-creation and trade-diversion effects on third countries.
What is the main principle of the World Trade Organization (WTO)?
Trade without discrimination
What is the difference between a Common Market and an Economic Union?
A Common Market involves the free movement of factors such as labor and capital, and the removal of physical, technical, and fiscal barriers, while an Economic Union involves the coordination of economic policies in addition to the features of a Common Market.
What is the impact of market integration on producer welfare?
Producers are better off
What is the net effect on welfare in the Home country when a tariff is imposed on imports according to the text?
Some agents in Home get better off and some get worse off
What is the demand curve based on according to the text?
Marginal utility
What is the main focus of the text's 'welfare analysis' approach to the effects of market integration?
The effects on consumers
Test your knowledge on the impact of EU integration on trade and welfare with this quiz based on the research of Julia Spornberger. Learn about the quantification of the border effect and the significant increase in trade shares and real income in the EU-15.
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