Two Foreign Nations Decided to Impose Tariffs on Imports from All

question 112

Multiple Choice

Two foreign nations decided to impose tariffs on imports from all countries. They set up a free trade area, removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Country A now begins to import sugar from Country B. Prior to this, Country A was producing sugar at a higher cost so it now benefits from this transaction. This is an example of

• A) trade creation.
• B) strategic pricing.
• C) synergy.
• D) trade diversion.
• E) protectionism.

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Definitions:

Real Property Taxes

Taxes imposed by local governments on real estate properties based on their assessed value.

Deductible

A cost that can be deducted from total income to lower the taxable income amount.

Charitable Contribution Deduction

A tax deduction that allows taxpayers to deduct donations made to qualifying charitable organizations from their taxable income.

Itemize Deductions

To list allowable expenses that can be subtracted from adjusted gross income to reduce taxable income, rather than taking a standard deduction.