Suppose a New EU Member Begins Substituting Its Imports from Non-EU

question 97

Multiple Choice

Suppose a new EU member begins substituting its imports from non-EU members to other EU members. This is an example of

• A) trade diversion.
• B) trade deflection.
• C) free trade.
• D) trade detection.

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Definitions:

Disposable Income

Budget available for households to direct towards saving and spending post-income tax assessment.

Disposable Income

Income available to an individual or household after accounting for taxes and other mandatory charges, available for spending or saving.

Saving

Saving refers to the portion of income not spent on current expenses and set aside for future use, often placed in accounts or investments that can accumulate interest over time.

Induced Consumption

The portion of consumption that changes as a result of changes in income, with higher incomes leading to increased consumption.