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| 1 | When the only form of protection is a tariff, then the difference between the domestic and border price is exactly equal to the tariff. |
 | A) | True |
| B) | False |
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| 2 | A main principle of the GATT/WTO is that all trade barriers should be non-discriminatory, so preferential trade arrangements are illegal under the WTO. |
| A) | True |
| B) | False |
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| 3 | According to Viner’s ambiguity discriminatory liberalization is both ‘liberalization’ – which removes some price wedges and thus tends to improve economic efficiency and Home welfare – and ‘discrimination’ – which introduces new price wedges and thus tends to harm efficiency and welfare. |
| A) | True |
| B) | False |
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| 4 | Starting from a situation where a nation imposes an MFN tariff, a preferential liberalization will lead the nation to buy a higher fraction of its imports from the nation which received the tariff preference and a lower fraction of its imports from the rest of the world. |
| A) | True |
| B) | False |
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| 5 | Starting from a situation where a nation imposes an MFN tariff, a preferential liberalization will harm the non-preferred supplier since it will export less and receive a lower price for these exports. |
| A) | True |
| B) | False |
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| 6 | Preferential liberalization implies liberalization on one hand, which tends to be welfare enhancing, and new discrimination on the other hand, which tends to be welfare worsening. The standard names for these two opposing effects are 'trade creation' and 'trade diversion'. |
| A) | True |
| B) | False |
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| 7 | The welfare effects of the preferential liberalization of a frictional barrier are always welfare-enhancing for the liberalizer even if it is preferential. |
| A) | True |
| B) | False |
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| 8 | Formation of the EEC6's customs union resulted in a rise in the share of imports of the EEC6 from each other. |
| A) | True |
| B) | False |
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| 9 | The level of imports from the non-preferred supplier of imports falls because domestic consumers see a relative rise in the price of these goods. |
| A) | True |
| B) | False |
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| 10 | The import supply curve is: |
| A) | usually downward sloped. |
| B) | a reflection of how much it costs foreigners to supply the goods. |
| C) | the horizontal difference between the domestic demand and supply curves. |
| D) | the marginal value of consuming goods. |
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| 11 | Consider Figure 5.4 to answer this question.
After the preferential trade arrangement (PTA) the new domestic price for home is . |
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| 12 | Consider Figure 5.4 to answer this question.
After the preferential trade arrangement (PTA) the border price for imports from Partner is . |
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| 13 | Consider Figure 5.4 to answer this question.
After the preferential trade arrangement (PTA) the level of exports from Partner . |
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| 14 | After the preferential trade arrangement (PTA) the change in Home net welfare is .
(Use the numbers to refer to specific areas.) |
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| 15 | After a preferential trade arrangement (PTA), RoW’s border price ____ while its export volume ____. |
| A) | rises ; rises |
| B) | rises ; falls |
| C) | falls ; rises |
| D) | falls ; falls |
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| 16 | When a nation imposes a tariff, the tariff is collected on: |
| A) | the additional goods imported. |
| B) | all goods, both domestically produced and imported. |
| C) | imported goods. |
| D) | exported goods. |
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| 17 | Supply switching occurs when a discriminatory liberalization induces the Home nation to switch some of its purchases to import suppliers who benefit from the RTA and away from suppliers based in nations that did not benefit from the RTA. |
| A) | True |
| B) | False |
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| 18 | Viner’s concept of trade creation refers to: |
| A) | Partner imports displacing Home production in Home markets. |
| B) | Home products displacing Partner imports in Home markets. |
| C) | RoW imports displacing Partner imports in Home markets. |
| D) | Partner imports displacing RoW imports in Home markets. |
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| 19 | The launch of the euro can be viewed as a ____ removal of ____ in the extent that it gives access to all Eurozone markets at no extra cost. |
| A) | non-discriminatory ; tariff barriers |
| B) | discriminatory ; tariff barriers |
| C) | non-discriminatory ; frictional barriers |
| D) | discriminatory ; frictional barriers |
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| 20 | In the 1960’s, the European Free Trade Association (EFTA) was a custom union. |
| A) | True |
| B) | False |