Trade Creation and Trade Diversion Refer to the Short-Run (Static)

question 80

True/False

Trade creation and trade diversion refer to the short-run (static) effects of economic integration, while economies of scale, stimulus to investment, and effects on competition refer to the long-run (dynamic) effects.

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Definitions:

Treasury Bill

A short-term government security issued at a discount from the face value and pays no interest before maturing at its face value.

Effective Annual Rate

The interest rate on a loan or investment, adjusted for the effect of compounding over a one-year period.

Par

The face value of a bond or other financial instrument, which is the amount to be paid to the holder at maturity.

HPR

Holding Period Return, a measure of the total return received from holding an asset or portfolio of assets over a specified period of time.