Which of the Following Is True of Trade Diversion

question 19

Multiple Choice

Which of the following is true of trade diversion?

• A) It increases the purchasing power of consumers.
• B) It increases the level of trade between nonmember nations.
• C) It generally increases the prices of products in a nation.
• D) It guarantees consumers a wider selection of goods.

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Definitions:

Investment Outflows

Money expended on acquiring or investing in assets with the expectation of generating future returns.

Uneven Cash Flows

Cash receipts and payments that vary in amount and do not occur at regular intervals, challenging budgeting and forecasting.

Net Present Value

A calculation that compares the present value of cash inflows to the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Cash Inflows

Money coming into a business from various sources, including sales, financing, and investments.