One Reason Why Most Economists Forecast That the Effects of NAFTA

question 29

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.

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Definitions:

Maintenance Costs

The expenses incurred to keep an asset in usable condition or restore it to its original condition without enhancing its value.

Depreciation Method

A systematic approach used to allocate the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Composite Depreciation

A depreciation method that applies a single depreciation rate to a group of assets with different lives, treating them as a single asset.

Group Depreciation

A method of depreciation where a group of assets with similar life spans is depreciated as a single asset.