INTB 200 Exam 2 #1 Questions with correct answers
What is a defining characteristic of a free trade area? - ✔✔Each country
determines its own trade policies with nonmembers.
What is a customs union? - ✔✔A free trade area plus a common external tariff.
What is a common market? - ✔✔A customs union plus free movement of labor
and capital.
What is an economic union? - ✔✔A common market plus harmonized economic
policies.
What is a political union? - ✔✔A central political apparatus coordinates all
policies.
What is trade creation? - ✔✔Shifting from high-cost domestic production to low-
cost partner production.
What is trade diversion? - ✔✔Shifting from low-cost non-member to higher-cost
member.
What does EU stand for? - ✔✔European Union.
What does USMCA stand for? - ✔✔United States-Mexico-Canada Agreement.
, What is ASEAN? - ✔✔Association of Southeast Asian Nations.
What is Mercosur? - ✔✔A South American trade bloc.
What does CAFTA-DR stand for? - ✔✔Central America-Dominican Republic Free
Trade Agreement.
What does CARICOM stand for? - ✔✔Caribbean Community.
What is the foreign exchange market? - ✔✔A global network for currency
conversion.
What is an exchange rate? - ✔✔The price of one currency in terms of another.
What is a spot exchange rate? - ✔✔The rate for immediate delivery.
What is a forward exchange rate? - ✔✔The rate for future delivery.
What is a currency swap? - ✔✔A simultaneous spot purchase and forward sale.
What is hedging? - ✔✔Insuring against foreign exchange risk.
What is foreign exchange risk? - ✔✔Adverse consequences of exchange rate
changes.
What is a defining characteristic of a free trade area? - ✔✔Each country
determines its own trade policies with nonmembers.
What is a customs union? - ✔✔A free trade area plus a common external tariff.
What is a common market? - ✔✔A customs union plus free movement of labor
and capital.
What is an economic union? - ✔✔A common market plus harmonized economic
policies.
What is a political union? - ✔✔A central political apparatus coordinates all
policies.
What is trade creation? - ✔✔Shifting from high-cost domestic production to low-
cost partner production.
What is trade diversion? - ✔✔Shifting from low-cost non-member to higher-cost
member.
What does EU stand for? - ✔✔European Union.
What does USMCA stand for? - ✔✔United States-Mexico-Canada Agreement.
, What is ASEAN? - ✔✔Association of Southeast Asian Nations.
What is Mercosur? - ✔✔A South American trade bloc.
What does CAFTA-DR stand for? - ✔✔Central America-Dominican Republic Free
Trade Agreement.
What does CARICOM stand for? - ✔✔Caribbean Community.
What is the foreign exchange market? - ✔✔A global network for currency
conversion.
What is an exchange rate? - ✔✔The price of one currency in terms of another.
What is a spot exchange rate? - ✔✔The rate for immediate delivery.
What is a forward exchange rate? - ✔✔The rate for future delivery.
What is a currency swap? - ✔✔A simultaneous spot purchase and forward sale.
What is hedging? - ✔✔Insuring against foreign exchange risk.
What is foreign exchange risk? - ✔✔Adverse consequences of exchange rate
changes.
