Implementing a Regional Free­trade Agreement May Have an

question 117

Multiple Choice

Implementing a regional free­trade agreement may have an
Effect in which, due to reduced tariffs, a nation begins to import a
Product from another member country that it had previously
Imported from outside the new trade region.This effect is called:

• A)trade creation.
• B)trade diversion.
• C)reciprocal trade agreements.
• D)the employment effect of FTAs.

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Definitions:

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to buy at different price levels, over a specific time period.

Economic Resource

An asset used to produce goods and services that can provide economic benefit.

Money Balances

Refers to the amount of money held by an individual or entity in the form of cash or bank deposits.

Capital Resource

A capital resource is an asset utilized by a company to produce goods and services, such as buildings, machinery, and equipment.