Topic 2, Economic integration Flashcards
- In any process of economic integration
a) Negative integration refers to the harmful or negative effects on any (or all) of the countries which join the process
b) Negative integration refers to the creation of new instruments and institutions at the supranational level
c) Negative integration refers to the removal of barriers or economic boundaries that obstruct the creation of unified markets
d) Positive integration refers to the one that does not achieve the full degree of integration
c) Negative integration refers to the removal of barriers or economic boundaries that obstruct the creation of unified markets
- Which of the following is correct regarding a Customs Union
a) It is the stage/form of economic integration that the European Economic Community (EEC) reached following the signing of the Single European Act
b) Generates a set of effects on the allocative efficiency of the integrating countries that are
grouped under the name “dynamic effects”
c) It is characterized by the removal of tariffs and non-tariff barriers on trade, and the establishment of a common external tariff (and common trade policy)
d) Allows each country to maintain non-tariff barriers (except quantitative restrictions) on the rest of partners
b) Generates a set of effects on the allocative efficiency of the integrating countries that are grouped under the name “dynamic effects”
- With economies of scale, specialization in production between two countries that form a customs union
a) Would be positive (good) for all consumers but negative (bad) for some producers
b) Would be positive (good) for all producers but not for all consumers
c) None of the others is correct
d) Would be positive (good) only for some producers and for some consumers
a) Would be positive (good) for all consumers but negative (bad) for some producers
- Perverse specialization is the one:
a) Derived from the formation of a CU when one of the countries which integrates is bigger than the others
b) In which the less efficient country obtains a higher market share
c) In which the most efficient country obtains a higher market share despite having the smallest demand (population)
d) Involving a different specialization imposed by the technology used by companies
b) In which the less efficient country obtains a higher market share
- The removal of non-tariff barriers in a customs union
a) Benefits member states but has no effect on non-integrated countries
b) Benefits both member and non-member states
c) Causes significant harm on member states because it reduces tariff revenue
d) Has no static effects because it does not reduce production costs
b) Benefits both member and non-member states
- A Dutch company exports orange juice from Brazil via the Netherlands to various EU Member States. On Cyprus, he was confronted with a requirement to produce a health certificate for his product as a condition for putting it on the market. This is a case of a
a) Barrier to the free movement of services on a permanent basis
b) Non-tariff barrier to the free movement of goods, namely a tax barrier
c) Non-tariff barrier to the free movement of goods, namely a technical barrier.
d) Non-tariff barrier to the free movement of goods, namely a physical barrier.
d) Non-tariff barrier to the free movement of goods, namely a physical barrier.
- Regarding the free movement of services and workers
a) They have been strongly favoured by member states, which have been willing to harmonize rules for both the movement of services and workers
b) They have developed much more slowly than the free movement of goods
c) They were mostly achieved immediately after the Single European Act was passed
d) They have contributed significantly to improve the allocation of resources leading to convergence of unemployment rates and wages
b) They have developed much more slowly than the free movement of goods
- A Hungarian national had worked for 20 years in Romania and 18 in Hungary. When approaching retirement age, he applied for his pension in Hungary. The Hungarian authorities asked Romania to calculate his pension rights for the years worked there. For almost a year, they received no reply, despite several reminders. This is an example of a
a) Non-tariff barrier to the free movement of goods, namely a tax barrier.
b) Non-tariff barrier to the free movement of services.
c) Non-tariff barrier to the free movement of workers on a temporary basis (short term mobility)
d) Non-tariff barrier to the free movement of workers on a permanent basis (long term mobility)
d) Non-tariff barrier to the free movement of workers on a permanent basis (long term mobility)
- Consider a country A that produces a good X at a price = 100 before taxes and which sets a 20% indirect tax (VAT); and a country B that produces the same good at a price = 105 and sets a 10% indirect tax. After the formation of a customs union between them, which of the following is correct
a) VAT will act as a non-tariff barrier when the tax is charged at destination (point of consumption)
b) Under taxation at source (point of production), the less efficient country manufacturing product (B) will import the product from the more efficient country (A)
c) Under taxation at source (point of production), the most efficient country manufacturing product (A) will export the product to the less efficient country (B)
d) Under taxation at source (point of production), we can say that VAT acts as a non-tariff barrier because B will not import the product from A despite it being cheaper (100 vs 105), given that the price after tax ends up being 120 in A compared to 115.5 in B
d) Under taxation at source (point of production), we can say that VAT acts as a non-tariff barrier because B will not import the product from A despite it being cheaper (100 vs 105), given that the price after tax ends up being 120 in A compared to 115.5 in B
