One Reason Why Most Economists Forecast That the Effects of NAFTA

question 6

Multiple Choice

One reason why most economists forecast that the effects of NAFTA on the U.S.economy would be small is because

• A)NAFTA does not bring down tariffs far enough.
• B)the Mexican economy is small relative to the U.S.economy.
• C)NAFTA trade opening provisions only cover a handful of sectors.
• D)Mexico was not expected to live up to its obligations under the agreement.
• E)the United States was not expected to live up to its obligations under the agreement.

---

Definitions:

Adverse Selection

A situation where one party in a transaction has more information than the other, often leading to an unfavorable outcome for the less informed party.

Balanced Budgets

Occurs when government revenues exactly match or exceed government expenditures in a specific period.

Deferred Costs

Expenses or costs that are incurred in one period but deferred to future periods for financial reporting.

Monetary Policy

The process by which a country's central bank controls the money supply, often targeting an inflation rate or interest rate to ensure economic stability and growth.