Because It Is Difficult to Negotiate Multilateral Trade Agreements, Some

question 141

Multiple Choice

Because it is difficult to negotiate multilateral trade agreements, some economists argue that regional trade agreements are always beneficial since they represent a movement toward freer trade, which is better than no movement at all. Is this argument always correct?

• A) Yes; any movement toward freer trade is better than no movement at all.
• B) No; some preferential trade agreements may have higher trade diversion costs than trade creation gains.
• C) Yes; all preferential trade agreements have higher trade creation gains than trade diversion losses.
• D) No; all preferential trade agreements have higher trade diversion losses than trade creation gains.

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Definitions:

Benefits

Advantages or payments made to individuals or employees, which can include health insurance, retirement plans, and other perks beyond basic salaries.

Costs

The expenses incurred in the process of producing or providing goods and services.

Efficiency Standpoint

A perspective from which actions are evaluated based on their ability to achieve the highest output with the least waste of resources.

Economic Action

Any decision or behavior by individuals or organizations that involves the generation, distribution, and consumption of goods and services.