A Free Trade Area Is an Agreement That

question 75

Multiple Choice

A free trade area is an agreement that

• A) involves two or more countries that agree to eliminate tariffs and other trade restrictions on most or all mutual trade of their own goods and services,where each country has different tariffs for imports from non-member countries.
• B) involves two or more countries that not only agree to eliminate tariffs and other trade restrictions on most or all mutual trade but also agree to a common set of trade barriers to imports from non-member countries.
• C) involves two or more countries eliminating trade restrictions on most or all mutual trade,maintaining a common set of trade barriers against imports from non-member countries,and permitting mobility of capital and labour among member countries.
• D) involves two or more countries eliminating trade restrictions on most or all mutual trade,maintaining a common set of trade barriers against imports from non-member countries,permitting mobility of capital and labour among member countries,and adopting a single currency.
• E) involves two or more countries that dissolve their borders to become a single political entity.

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Definitions:

Authorized Channels

Officially approved and recognized paths or mediums through which products or information are distributed, ensuring legitimacy and compliance with regulations.

Protectionism

A government policy aimed at restricting international trade to protect domestic industries from foreign competition.

Trade Feedback Effect

A phenomenon where an increase in exports leads to an increase in national income and thus an increase in imports.

Countertrade

An exchange of goods or services for other goods or services without using a medium of exchange, such as money.