IB DP ECON 4.4 - 4.6 Formative

What is the role of the WTO?

• Increase consumer choice

• Decreasing conflicts in the world

• Increasing protectionism

• Promoting free trade

Trading blocs Table below:

In the table above, there is one error. There should be X marked against one stage of economic integration and doing so will make this chart error free. Against which stage and for what feature should we mark this X?

• Monetary union – common economic policy

• Free trade area – common external tariff

• Customs union – common external tariff

• Customs union – factor and asset mobility

Why does the WTO have problems enforcing its operating principles?

• Because it is not recognised by the US

• Because it only has very few members

• Because of its lack of legislative power

• Because it is part of the UN

True, False or Uncertain:

Country D is not a part of free trade area or customs union.

Out of the two figures above the total exports from country D to countries A, B and C will be the lowest in the customs union.

Which one of the following is a principle under which the WTO operates?

• The principle of absolute advantage

• The principle of comparative advantage

• The least favoured nation principle

• The reciprocity principle

What do we call trade agreements taking place between two countries?

• Multilateral

• Bilateral

• Customs union

• Protectionist

What do we call trade agreements taking place among several countries?

• Customs union

• Bilateral

• Protectionist

• Multilateral

What kind of trade bloc is shown on the diagram below?

• Preferential trade arrangements (PTAs)

• Free trade area

• Monetary union

• Common market

Which of the following is an advantage of joining a trade bloc?

• Economies of scale

• Low taxes

• Low unemployment

• Low inflation

What trade bloc allows for free movement of the factors of production?

• Free trade area

• Common market

• All of the options

• Customs union