Suppose that steel from Japan faces a 20 percent traiff in France and a 25 Percent traiff in Italy. while France and Italy maintain free trade between each other. France and Italy are therefore part of a (an):
A. Free trade area
B. Customs union
Common market
D. Economic union
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Suppose that Mexico and Canada form a free-trade area and Canada begins importing steel from Mexico rather than from Germany. There occurs:
A. Trade diversion
B. Trade creation
C. Trade destruction
D. Trade exhaustion
Suppose that Mexico and Canada form a free-trade area. Mexicans then decrease auto manufacturing and increase imports of autos form Canada,whiletheCanadiansdecreasecomputerproductionandimportmorecomputersfromMexico.Thisisanexampleof:
A. Trade diversion
B. Trade creation
C. Trade destruction
D. Trade exhaustion
IftheUnitedStatesandCanadaabolishalltariffsoneachother'sgoodsandimplementacommontariffongoodsimportedfromother countries,thereoccursa(an):
A. Free-trade area
B. Customs union
Common market
D. Economic union
Suppose that the United Kingdom and Italy abolish all traiffs on each other's goods and all restrictions on movements of factors of prodoction between them. They also implement a common protectionist policy toward other countries. This is an example of a (an):
A. Free-trade area
B. Customs union
Common market
D. Economic union