The Trade-Creation Effect Refers To

question 31

Multiple Choice

The trade-creation effect refers to:

• A)a reduction in economic efficiency as a result of a preferential trade agreement.
• B)a production shift to a higher-cost producer as a result of a preferential trade agreement.
• C)the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home.
• D)diversion of production from a country that has comparative advantage.
• E)a production shift to a country that does not have comparative advantage.

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Definitions:

Accounts Payable

Accounts Payable is a liability account on a company's balance sheet representing money owed to suppliers or creditors for goods and services received but not yet paid for.

Trial Balance

A bookkeeping report that lists the balances of all ledgers accounts to check that debits equal credits in the double-entry accounting system.

Debits

Debits refer to an accounting entry that results in either an increase in assets or expenses or a decrease in liabilities or equity on a company's balance sheet.

Ledger

A Ledger is a book or collection of accounts in which account transactions are recorded, classified, and summarized.