Suppose That Mexico and Canada Form a Free-Trade Area

question 94

Multiple Choice

Suppose that Mexico and Canada form a free-trade area.Mexicans then decrease auto manufacturing and increase imports of autos from Canada,while the Canadians decrease computer production and import more computers from Mexico.This is an example of:

• A) Trade diversion
• B) Trade creation
• C) Trade destruction
• D) Trade exhaustion

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Definitions:

Forged Instrument

A document that has been illegally altered or fabricated to deceive and is used in the commission of fraud, such as a counterfeit check.

Transfer Warranty

A legal guarantee assumed by a person who transfers a negotiable instrument, asserting that certain conditions about the instrument are met.

Authentic

Genuine or verified to be original and not a copy or fake.

Negotiable Instrument

A voucher confirming the remittance of a specified financial amount, payable either immediately upon demand or on a scheduled date, with the payer's details included on the document.