Multiple choice June 2021 exam Flashcards
QUESTION 1. In relation to the process of European integration:
a) The process of European integration has been challenged by the different views on the depth of European integration (Intergovernmentalism versus Federalism).
b) Nowadays, the European Union includes 28 countries, and 19 of them also share a common currency.
c) One of the main goals of the Maastricht Treaty was to achieve a monetary union by 1999, and a single currency by 2002.
d) The “bicycle metaphor” refers to the increasing force for inclusion in the European Union as a result of its market growing bigger and faster.
a) The process of European integration has been challenged by the different views on the depth of European integration (Intergovernmentalism versus Federalism).
c) One of the main goals of the Maastricht Treaty was to achieve a monetary union by 1999, and a single currency by 2002.
QUESTION 2. In relation to European Union law, institutions and budget:
a) The EU budget must be balanced every year, even during a recession.
b) A major goal of the Treaty of Rome signed by 6 countries in 1957 was to preserve peace and security in Europe by means of closer economic cooperation.
c) Harmonization of social and tax policies were omitted in the Treaty of Rome.
d) Nowadays the main source of revenue in the EU budget is represented by import tariffs.
a) The EU budget must be balanced every year, even during a recession.
b) A major goal of the Treaty of Rome signed by 6 countries in 1957 was to preserve peace and security in Europe by means of closer economic cooperation.
c) Harmonization of social and tax policies were omitted in the Treaty of Rome.
QUESTION 3. In relation to economic integration:
a) Non-tariff barriers (health, safety, environmental regulations…) to intra-EU trade were completely eliminated in 1968 (together with the elimination of tariff barriers).
b) “Short-run (allocation) effects” of economic integration might lead to net welfare losses.
c) Trade creation implies replacing imports from more efficient third countries by imports from a country (trade partner) that is less efficient than the former.
d) The EU is an example of regional trade agreements.
b) “Short-run (allocation) effects” of economic integration might lead to net welfare losses.
d) The EU is an example of regional trade agreements.
QUESTON 4. In relation to economic integration:
a) Customs Unions and Free Trade Areas are equivalent.
b) “Allocation effects” of economic integration are related to changes in the rate at which production factors are accumulated brought about by economic integration.
c) A common currency is necessary to achieve a truly Single Market.
d) The Single Market has led to a significant increase in the relative importance of inter-industry trade and a fall in the relative importance of intra-industry trade among EU member countries.
QUESTION 5. In relation to economic growth, labor market and migration:
a) The European economy has performed worse than the US economy in the last decades mainly because its lower productivity growth and lower numbers of hours worked per worker.
b) The growth effects of economic integration are related to an increase in investment prompted by the process of integration.
c) High unemployment rates, long-term unemployment and high segmentation are among the major problems in EU labour market.
d) Migration flows within EU countries are still fairly low (when compared to the US).
a) The European economy has performed worse than the US economy in the last decades mainly because its lower productivity growth and lower numbers of hours worked per worker.
b) The growth effects of economic integration are related to an increase in investment prompted by the process of integration.
c) High unemployment rates, long-term unemployment and high segmentation are among the major problems in EU labour market.
d) Migration flows within EU countries are still fairly low (when compared to the US).
QUESTION 6. In relation to the Economic and Monetary Union
a) Eurozone member countries do not fulfill the Impossible Trinity Principle since they have full capital mobility, fixed exchange rate and autonomous monetary policy.
b) When real exchange rate falls (e.g. RER=E$/€[P€/P$]), external price competitiveness (of Eurozone) improves.
c) The problem of asymmetric shocks within a monetary union is related to the lack of macroeconomic policies to tackle economic shocks with a different effect in different countries.
d) Nowadays, the Eurozone is not an optimum currency area.
b) When real exchange rate falls (e.g. RER=E$/€[P€/P$]), external price competitiveness (of Eurozone) improves.
c) The problem of asymmetric shocks within a monetary union is related to the lack of macroeconomic policies to tackle economic shocks with a different effect in different countries.
d) Nowadays, the Eurozone is not an optimum currency area.
QUESTION 7. In relation to Macroeconomic Policy in the EMU:
a) The main objective of the European Monetary Policy is to maintain price stability, defined as a year-on-year increase in the Harmonized Index of Consumer Prices (HICP) for the Eurozone of (close but) below 2% in the medium term.
b) The presence of spillovers/externalities is an argument against some degree of coordination of fiscal policies among EU member countries.
c) One of the main challenges to the monetary policy in the EMU is that it is a “onesize-fits-all” policy for countries that are rather heterogenous.
d) The main goal of the Stability and Growth Pact is the sustainability of public budget compatible with flexibility to respond to economic crisis
a) The main objective of the European Monetary Policy is to maintain price stability, defined as a year-on-year increase in the Harmonized Index of Consumer Prices (HICP) for the Eurozone of (close but) below 2% in the medium term.
c) One of the main challenges to the monetary policy in the EMU is that it is a “onesize-fits-all” policy for countries that are rather heterogenous.
d) The main goal of the Stability and Growth Pact is the sustainability of public budget compatible with flexibility to respond to economic crisis
QUESTION 8. In relation to Common Agricultural Policy (CAP):
a) The CAP started as a simple price support policy in 1962 and led to welfare gains due to efficiency gains.
b) The price support scheme of the early days together with the “green revolution” lead to some unintended consequences: (i) production surpluses that were dumped into international markets; (ii) very costly policy (i.e. budget problem); and (iii) negative environmental impact.
c) “Decoupling” has contributed to reduce production surplus and has also solved the budget problem (i.e. the large share of EU’s budget allocated to CAP).
d) According to the Treaty of Rome, one of the goals of the Common Agricultural Policy is to raise farm incomes in the EU.
b) The price support scheme of the early days together with the “green revolution” lead to some unintended consequences: (i) production surpluses that were dumped into international markets; (ii) very costly policy (i.e. budget problem); and (iii) negative environmental impact.
d) According to the Treaty of Rome, one of the goals of the Common Agricultural Policy is to raise farm incomes in the EU.
QUESTION 9. In relation to Competition Policy:
a) Competition Policy is an exclusive competence of the EU whose main goal is to avoid both private and public practices that prevent competition.
b) The abuse of a dominant market position is illegal.
c) State aid is always prohibited by EU competition policy.
d) Agreements between companies that restrict competition may be allowed under certain conditions. For instance, when they involve gains in efficiency that are shared with consumers without complete elimination of competition.
a) Competition Policy is an exclusive competence of the EU whose main goal is to avoid both private and public practices that prevent competition.
b) The abuse of a dominant market position is illegal.
d) Agreements between companies that restrict competition may be allowed under certain conditions. For instance, when they involve gains in efficiency that are shared with consumers without complete elimination of competition.
QUESTION 10. In relation to European Regional Policy:
a) Although the Treaty of Rome included some concern about the regional inequality, major EU funding for less-favoured regions was introduced only when the first ‘poor’ member, Ireland, joined in 1973.
b) Richer regions are clustered and form the “periphery” of the EU economy.
c) According to the New Economic Geography integration reduces trade costs, so that distance provides less protection from distant competitors (that is, it weakens “dispersion forces”).
d) Regional GDP per capita is a key indicator for European Regional Policy.
a) Although the Treaty of Rome included some concern about the regional inequality, major EU funding for less-favoured regions was introduced only when the first ‘poor’ member, Ireland, joined in 1973.
c) According to the New Economic Geography integration reduces trade costs, so that distance provides less protection from distant competitors (that is, it weakens “dispersion forces”).
d) Regional GDP per capita is a key indicator for European Regional Policy.
