4.1.5 Trading blocs and the World Trade Organisation Quiz: Pearson Edexcel Economics, Unit 4

The 20 questions

1. What defines external tariff policy in a free trade area?

   • Common external tariffs
   • Total trade bans
   • Independent external tariffs
   • Fixed exchange rates

2. Which feature distinguishes a customs union from a free trade area?

   • Common external tariff
   • Free factor movement
   • Single shared currency
   • Removal of borders

3. Which feature distinguishes a common market from a customs union?

   • Single currency
   • Shared central bank
   • Common external tariff
   • Free factor movement

4. What is a defining feature of a monetary union?

   • Floating exchange rates
   • Custom tariffs
   • Single central bank
   • Independent interest rates

5. Which condition is necessary for a monetary union to function successfully?

   • Asymmetric economic shocks
   • High labour mobility
   • Independent central banks
   • Trade protectionism

6. Which macroeconomic policy tool is lost when a country joins a monetary union?

   • Government expenditure
   • Independent monetary policy
   • Fiscal policy
   • Income tax rates

7. What benefit occurs when a regional trade agreement causes trade creation?

   • Increased trade diversion
   • Reduced consumer choice
   • Higher import tariffs
   • Increased economic efficiency

8. What occurs when trade shifts from a low-cost non-member to a high-cost member state?

   • Trade diversion
   • Comparative advantage
   • Trade creation
   • Terms of trade

9. What is a primary objective of the World Trade Organisation?

   • Fixing exchange rates
   • Managing central banks
   • Collecting import tariffs
   • Trade liberalisation

10. What does the World Trade Organisation's most-favoured-nation rule enforce?

    • Mandatory price controls
    • Preferential tariffs
    • Unilateral quota increases
    • Equal trade treatment

11. A product costs £80. A customs union applies a 15% tariff. What is the border price?

    • £68
    • £92
    • £95
    • £88

12. Which rule prevents trade deflection in a free trade area?

    • Rules of origin
    • Bilateral quotas
    • Import quotas
    • Common external tariffs

13. A regional trade agreement increases economic welfare if trade creation exceeds what?

    • Trade diversion
    • Trade deflection
    • Dumping
    • Import tariffs

14. High inflation in a monetary union causes member exports to lose what?

    • Currency value
    • Trade quotas
    • Competitiveness
    • Tariff protection

15. Which factor helps a monetary union member adjust to asymmetric economic shocks?

    • High labour mobility
    • Rigid exchange rates
    • Fixed interest rates
    • High import tariffs

16. How many countries are involved in a bilateral trade agreement?

    • Four
    • Two
    • All members
    • Three

17. Which WTO mechanism allows members to challenge unfair trade practices legally?

    • Tariff protection
    • Common external tariffs
    • Dispute settlement
    • Trade creation

18. Which type of trading bloc represents the highest level of economic integration?

    • Customs union
    • Monetary union
    • Common market
    • Free trade area

19. A common market allows the free movement of goods, services, capital, and what?

    • Subsidies
    • Tariffs
    • Labour
    • Quotas

20. What feature of a customs union prevents members setting independent external tariffs?

    • Rules of origin
    • Free movement rule
    • Bilateral quotas
    • Common external tariff

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