MANAGERIAL ECONOMICS AND BUSINESS
STRATEGY ACTUAL TEST PAPER
COMPLETE QUESTIONS AND ANSWERS
FULL SOLUTION
●● Free Trade Area
Answer: No trade barriers between members; each country keeps its
own trade policy with non-members.
●● Customs Union
Answer: No trade barriers between members + common trade policy
toward non-members.
●● Common Market
Answer: Customs Union + free movement of labor and capital.
●● Economic Union
Answer: Common Market + common currency and coordinated
economic policies.
●● Political Union
Answer: Countries share a central government for economic, social, and
foreign policy.
, ●● National Sovereignty
Answer: A country's ability to govern itself independently.
●● Trade Creation
Answer: Replacing expensive domestic production with cheaper imports
from member countries.
●● Trade Diversion
Answer: Replacing cheaper outside suppliers with more expensive
suppliers inside the trade bloc.
●● International Money / Financial System
Answer:
●● Floating Exchange Rate
Answer: Currency value determined by supply and demand.
●● Pegged Exchange Rate
Answer: Currency value fixed to another currency.
●● Managed Float (Dirty Float)
STRATEGY ACTUAL TEST PAPER
COMPLETE QUESTIONS AND ANSWERS
FULL SOLUTION
●● Free Trade Area
Answer: No trade barriers between members; each country keeps its
own trade policy with non-members.
●● Customs Union
Answer: No trade barriers between members + common trade policy
toward non-members.
●● Common Market
Answer: Customs Union + free movement of labor and capital.
●● Economic Union
Answer: Common Market + common currency and coordinated
economic policies.
●● Political Union
Answer: Countries share a central government for economic, social, and
foreign policy.
, ●● National Sovereignty
Answer: A country's ability to govern itself independently.
●● Trade Creation
Answer: Replacing expensive domestic production with cheaper imports
from member countries.
●● Trade Diversion
Answer: Replacing cheaper outside suppliers with more expensive
suppliers inside the trade bloc.
●● International Money / Financial System
Answer:
●● Floating Exchange Rate
Answer: Currency value determined by supply and demand.
●● Pegged Exchange Rate
Answer: Currency value fixed to another currency.
●● Managed Float (Dirty Float)
