Members of the EU find that trade creation is encouraged when their economies are in what condition?
Correct answer A. Highly competitive
Topic / 25 questions
Regional Trading Arrangements MCQs
Regional Trading Arrangements MCQs cover agreements in which groups of countries reduce trade barriers among themselves, such as free trade areas and customs unions. They help economics students and candidates for CSS, PMS, UGC NET and BCS. Each question shows an instant answer, so you can practise telling trade creation from trade diversion.
- Miscellaneous Economics 737
- Basic of Economics 430
- Markets, Efficiency And The Public Interest 167
- Agriculture & Irrigation System of Pakistan 126
- Market 87
- Macroeconomic Issues and Analysis 75
- Money, Interest Rates And Output 73
- Introduction To Economics 70
- Population And Development 62
- Profit Maximizing Under Perfect Competition And Monopoly 56
- Income Inequality 52
- Non-Tariff Trade Barriers 48
- Aggregate Supply, Unemployment And Inflation 45
- Natural Resources and the Environment Toward Sustainable Development 44
- Costs , Supply And Perfect Competition 44
- Human Capital 42
- Labour Market 39
- Monopoly 35
- Long Term Economic Growth 30
- Inflation & Productivity 30
- Regional Trading Arrangements 29
- Characteristics and Institutions of Developing Countries 24
- Oligopoly 23
- Consumer Theory vs. Real Consumers 20
- Applied Microeconomics 20
- Alternative Theories Of The Firm 20
- Public Goods 20
- Balance of Payments, Aid and Foreign Investment 19
- Prices, Wages & Taxes 19
- Comparative GDP 19
- Budget Deficits And The Trade Balance 18
- Macroeconomic Policy Tools 18
- Asymmetric Information 17
- Application of Economics 16
- Production Factors 16
- Monopoly & Competition 15
- Capital Formation, Investment Choice, Information Technology, And Technical Progress 15
- Monetary, Fiscal And Incomes Policy, And Inflation 15
- Average And Total Cost 14
- Poverty, Malnutrition, And Income Inequality 12
- Monetary Union 10
Which of these countries does not belong to the European Union?
Correct answer A. Iceland
Which US factor of production is most likely to lose out (see its factor payment fall) because of NAFTA?
Correct answer D. Unskilled labour
Advertisement
What effect has the EU’s Common Agricultural Policy had on American farm exports?
Correct answer A. It has decreased American farm exports to the EU
When several countries impose a common external tariff, scrap tariffs among themselves and remove barriers to the movement of labour and capital between them, what have they formed?
Correct answer D. Common market
Under the Common Agricultural Policy, how are exports of surplus EU produce encouraged?
Correct answer D. Export subsidies
What type of trade arrangement is NAFTA?
Correct answer D. Free trade area
What is the European Monetary Union an example of?
Correct answer C. Monetary union
What is a regional trading bloc called in which members remove internal trade barriers but keep their own existing barriers against non-members?
Correct answer B. Free trade area
Advertisement
Which level of economic integration best describes the US economy?
Correct answer C. Monetary union
Mexican tomatoes face a 20 percent tariff in the United States and a 25 percent tariff in Canada, while the US and Canada trade freely with each other. What kind of arrangement do the two countries belong to?
Correct answer D. Free-trade area
What exists when imports from a higher-cost supplier inside a customs union replace imports from a lower-cost supplier outside it?
Correct answer D. Trade diversion
When does trade creation take place?
Correct answer D. When economic integration shifts product origin to a lower-cost member country
Under the EU’s Common Agricultural Policy, what does a variable import levy equal?
Correct answer D. The amount by which the EU's support price exceeds the world price
The European Union has achieved all of the following EXCEPT which one?
Correct answer D. Adopting a common fiscal policy for member nations
Advertisement
Which form of economic integration is the European Union an example of, according to this classification?
Correct answer C. Common market
What effect has the European Union had on American firms selling in the British market?
Correct answer B. It has made it harder for Americans to compete against the Germans in the British market
As of 2002, which currency became the official currency of the European Monetary Union?
Correct answer C. Euro
Setting up a common market involves all of the following EXCEPT which one?
Correct answer A. A common tax system and monetary union
When does trade diversion take place?
Correct answer D. When economic integration shifts product origin from a lower-cost non-member country to a higher-cost member country
About Regional Trading Arrangements MCQs
This International Economics topic explains the stages of economic integration: preferential trade arrangements, free trade areas, customs unions, common markets and economic unions. Questions test whether members keep separate tariffs on outsiders, as in a free trade area, or adopt a common external tariff, as in a customs union. You will also meet trade creation, when a regional group expands trade by replacing costly home production, and trade diversion, when imports from a cheaper outside supplier are replaced by those from a costlier member. These welfare ideas from Jacob Viner are core exam material.
Exams that include Regional Trading Arrangements MCQs
Pakistan
- CSS
- PMS
- FPSC
- PPSC
- Lecturer tests
- Banking job tests
India
- UPSC CSE
- UGC NET
- IBPS PO
- SBI PO
Bangladesh
- BCS
- Bangladesh Bank recruitment
- Bank job exams
Frequently asked questions
What is the difference between trade creation and trade diversion?
Trade creation happens when a regional group shifts production to a lower-cost member, increasing efficient trade. Trade diversion happens when imports from a low-cost outside country are replaced by imports from a higher-cost member because of the group's tariff preferences, which can reduce welfare.
How does a customs union differ from a free trade area?
Both remove tariffs between members. In a free trade area each member keeps its own tariffs on non-members, so tariffs on outside goods can differ. In a customs union members also adopt a common external tariff on imports from the rest of the world.
How many Regional Trading Arrangements MCQs are on MCQs360?
MCQs360 has 29 Regional Trading Arrangements MCQs, each with an instant answer, free and without sign-up. Revise the stages of integration in order first, then use these questions to test whether you can apply them to tariff examples.
Last reviewed October 2026