Trade Liberalization Quiz

The video, presented by Jeff, explores the economics of trade liberalization, focusing on free trade agreements and their impacts. It discusses the reduction of tariffs and quotas, highlighting agreements like USMCA and the UK-Australia deal. The video examines the economic consequences of trade liberalization, such as changes in consumer surplus and government revenue. It also covers efficiency gains, including allocative, productive, and dynamic efficiencies. The UK-Australia trade deal is analyzed, considering its micro and macroeconomic effects. The video concludes with a summary of trade liberalization's impacts on the UK economy.

What is a key feature of a free trade area?

• Relaxation of quotas

• Introduction of new trade barriers

• Reduction in domestic competition

• Increase in tariffs

What happens to consumer surplus when a tariff is removed?

• It becomes negative

• It increases

• It remains the same

• It decreases

Which type of efficiency is gained when trade liberalization leads to lower prices?

• Allocative efficiency

• Productive efficiency

• Dynamic efficiency

• Technical efficiency

What was significant about the UK-Australia trade deal?

• It decreased UK exports to Australia

• It was the first trade deal post-Brexit

• It increased tariffs on Australian goods

• It was the largest trade deal in history

What concern did the UK Farmers Union express about the trade deal with Australia?

• Increased imports of Australian meat

• Decreased demand for Australian products

• Increased tariffs on UK goods

• Reduced competition in the UK market

How might UK consumers benefit from the trade deal with Australia?

• Increased tariffs on UK exports

• Cheaper Australian meat and dairy products

• Higher prices for Australian goods

• Reduced availability of Australian products

What is a potential macroeconomic effect of the UK-Australia trade deal?

• Decrease in aggregate demand

• Increase in trade deficit

• Increase in aggregate demand

• Decrease in investment opportunities

Why is the trade deal with Australia unlikely to have a big effect on the UK economy?

• The deal significantly increases tariffs

• Most Australian goods were already tariff-free

• Australia is a major trading partner

• The UK has a large trade deficit with Australia

What percentage of UK exports go to Australia?

• 10%

• 90%

• 45%

• 1.6%

What is the gravity theory in trade?

• Countries trade more with distant nations

• Countries trade more with nearby nations

• Countries trade equally with all nations

• Countries avoid trading with neighboring nations