The Negative Effects of Trade Diversion Are Reduced When

question 84

Multiple Choice

The negative effects of trade diversion are reduced when:

• A) trade creation more than offsets trade diversion.
• B) consumers in the importing nation have a change in their buying habits.
• C) there is a cost increase in nations outside the region.
• D) the free-trade agreement includes more members.

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Definitions:

Future

A contract to buy or sell a specified asset at a predetermined price at a specified time in the future, used for hedging or speculation.

Equal Amounts

This term typically refers to financial transactions or mathematical problems where a series of payments or values are the same in each period.

Annuity Due

An annuity due is a type of annuity payment where payments are made at the beginning of each period, rather than at the end, as in an ordinary annuity.

Perpetuity

An infinite series of equal payments at equal intervals of time.