ASU ECN 306 (MacFie) Chapter 4 Study
Guide Questions and Answers 2026-
2027 Updated.
A basic WTO principle is that trade barriers:
- can be imposed by any country that believes it will benefit from the trade barriers
- should be lowered equally and without discrimination for all member countries.
- can be imposed if a majority of the members of the WTO agree.
- should be the same in all member countries so that the result is equivalent to free trade. -
Answer should be lowered equally and without discrimination for all member countries.
A typical individual country can be categorized as a(n):
- economic union.
- customs union.
- free trade area.
- trade bloc. - Answer economic union.
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.
- import tariffs.
- national product standards.
- rules of origin. - Answer an embargo.
,Through the 1980s, the European Common Market (now known as the European Union) was
not truly a common market because:
- it had barriers to trade among member nations.
- it did not have a unified economic policy among member nations.
- it had substantial barriers to the international movement of labor and capital.
- it did not allow free movement of labor and capital among member nations. - Answer it did
not allow free movement of labor and capital among member nations.
Embargoes have a more noticeable effect when the embargoing country has ______________
and the target country has _________________.
- low elasticities; low elasticities
- high elasticities; high elasticities
- low elasticities; high elasticities
- high elasticities; low elasticities - Answer high elasticities; low elasticities
The primary difference between a free trade area and a customs union is that:
- members of a free trade area adopt a common set of barriers for trade between the members.
- a free trade area is considered a trade bloc and a customs union is not.
- members of a customs union adopt a common set of external trade barriers.
- a free trade area can include parts of a country and a customs union includes entire countries.
- Answer members of a customs union adopt a common set of external trade barriers.
, 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 domestic producers are less likely to achieve scale economies.
- higher prices in the trade bloc countries.
- that the inefficiencies of monopolies are reduced.
- increased production costs. - Answer that the inefficiencies of monopolies are reduced.
___________________ is the most prominent trade bloc of developing countries.
- MERCOSUR
- NAFTA
- LAFTA
- WTO - Answer MERCOSUR
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 embargo.
- full economic union.
- customs union.
- trade bloc. - Answer trade bloc.
An acknowledged result of NAFTA is that:
- the United States has suffered a significant loss of jobs to Mexico.
Guide Questions and Answers 2026-
2027 Updated.
A basic WTO principle is that trade barriers:
- can be imposed by any country that believes it will benefit from the trade barriers
- should be lowered equally and without discrimination for all member countries.
- can be imposed if a majority of the members of the WTO agree.
- should be the same in all member countries so that the result is equivalent to free trade. -
Answer should be lowered equally and without discrimination for all member countries.
A typical individual country can be categorized as a(n):
- economic union.
- customs union.
- free trade area.
- trade bloc. - Answer economic union.
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.
- import tariffs.
- national product standards.
- rules of origin. - Answer an embargo.
,Through the 1980s, the European Common Market (now known as the European Union) was
not truly a common market because:
- it had barriers to trade among member nations.
- it did not have a unified economic policy among member nations.
- it had substantial barriers to the international movement of labor and capital.
- it did not allow free movement of labor and capital among member nations. - Answer it did
not allow free movement of labor and capital among member nations.
Embargoes have a more noticeable effect when the embargoing country has ______________
and the target country has _________________.
- low elasticities; low elasticities
- high elasticities; high elasticities
- low elasticities; high elasticities
- high elasticities; low elasticities - Answer high elasticities; low elasticities
The primary difference between a free trade area and a customs union is that:
- members of a free trade area adopt a common set of barriers for trade between the members.
- a free trade area is considered a trade bloc and a customs union is not.
- members of a customs union adopt a common set of external trade barriers.
- a free trade area can include parts of a country and a customs union includes entire countries.
- Answer members of a customs union adopt a common set of external trade barriers.
, 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 domestic producers are less likely to achieve scale economies.
- higher prices in the trade bloc countries.
- that the inefficiencies of monopolies are reduced.
- increased production costs. - Answer that the inefficiencies of monopolies are reduced.
___________________ is the most prominent trade bloc of developing countries.
- MERCOSUR
- NAFTA
- LAFTA
- WTO - Answer MERCOSUR
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 embargo.
- full economic union.
- customs union.
- trade bloc. - Answer trade bloc.
An acknowledged result of NAFTA is that:
- the United States has suffered a significant loss of jobs to Mexico.
