A __________ Is Created When a Group of States Reduce

question 4

Multiple Choice

A __________ is created when a group of states reduce or eliminate tariffs between themselves but maintain their own individual tariffs as to other states.

• A) free trade area
• B) Caribbean basin initiative
• C) customs union
• D) most favored nation

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Definitions:

Voluntary Export Restraint

A self-imposed limitation by exporting countries on the volume of their exports of a particular good.

Subsidy

A financial contribution granted by a government or another entity to support an industry, business, or individual, usually intended to keep prices low, support an essential service, or encourage activities beneficial to the public interest.

Tariff

A tax imposed on imported goods to either raise state revenue or protect domestic industries from foreign competition.

Quota

A government-imposed limit on the amount or value of goods that can be imported or exported during a specified time period, often used to protect domestic industries.