A Requirement That a Fraction of the Product Must Be

question 203

Multiple Choice

A requirement that a fraction of the product must be produced within the area to qualify for zero tariffs between the countries in the free trade area is called a(n)

• A)import substitution requirement.
• B)most-favored-nation requirement.
• C)domestic content restriction.
• D)managed trade restriction.
• E)trade-diversion requirement.

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Definitions:

Charters

Legal documents that establish the existence of corporations or cities and define their rights and privileges.

Negative Excess Reserves

A situation where banks have less reserves than the required minimum, often indicating liquidity problems within the banking system.

Liquidity Trap

A condition where the effectiveness of monetary policy in spurring economic growth is diminished due to high rates of savings and low interest rates.

Reserve Requirement

Central bank regulations that set the minimum amount of reserves that must be held by a commercial bank, not to be loaned out or spent.