Which feature of a customs union differentiates it from a free trade area?

Adoption of a common external trade policy More test answers on https://studyhippo.com/ib-chapter-9/

_____ occurs when lower-cost external suppliers are replaced by higher-cost suppliers within a free trade area.

Correct Trade diversion More test answers on https://studyhippo.com/bus-280-q-9/

Trade diversion occurs when higher-cost external producers are replaced by lower-cost external producers within the free trade area. TRUE or FALSE

False More test answers on https://studyhippo.com/mgt-302-ch-9/

The Free Trade Area of the Americas (FTAA) is a trade agreement ________.

that has been proposed to create the largest free trade area on the planet More test answers on https://studyhippo.com/global-test-2/

The most enduring free trade area in the world is the:

European Free Trade Association More test answers on https://studyhippo.com/global-91011/

In addition to NAFTA, the only other significant trade bloc in the Americas is Free Trade Area of the Americas (FTAA).

True More test answers on https://studyhippo.com/ib-chapter-9/

The country of Argonia and the country of Berylia imposed tariffs on imports from all countries. They set up a free trade area, removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Argonia now begins to import sugar from Berylia. Previously, Argonia was indigenously producing sugar at a higher cost. Thus, Argonia benefits from this transaction. This is known as _____.

Correct trade creation More test answers on https://studyhippo.com/bus-280-q-9/

Core part: Free Trade Area

-all barriers to the trade of goods and services among member countries are removed. no discriminatory tariffs, quotas, subsidies, or administrative impediments are allowed to distort trade between members. -each country is allowed to determine trade policies More test answers on https://studyhippo.com/international-management-ch-9/

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Free Trade Area Flashcards, test questions and answers

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What is Free Trade Area?

Free Trade Area (FTA) is an agreement between two or more countries to eliminate all tariff and non-tariff barriers among them. This means that there is no restriction on the flow of goods, services, capital and labor across the borders of these countries. Through the implementation of FTA, international trade is expected to expand by reducing costs in terms of cost of production and transaction costs. The advantages of FTA include reduction in inflationary pressure, increased competition, improved access to resources and new markets as well as increased foreign direct investment.The primary benefit associated with free trade area agreements lies in their ability to reduce tariffs and other taxes on products traded between participating nations. Tariffs are taxes imposed on imported goods; they protect domestic industries from foreign competition by raising prices for their products and making them less competitive compared with those sold abroad. By eliminating tariffs through a free trade area agreement, economic actors gain access to much larger markets than they would have otherwise been able to reach without such an arrangement allowing them to compete more effectively on price or quality without being hampered by steep import duties or other restrictions.Furthermore, another advantage associated with free trade agreements is that it increases competitive pressure within a particular market as well as between participating states leading to lower prices for consumers ultimately leading to higher output levels resulting from greater efficiency gains due to higher levels of competition amongst firms operating within the FTA zone. Free Trade Agreements can also lead to increased investment opportunities for local businesses through enhanced access for investors into foreign markets which can lead to job creation locally thus contributing towards economic growth within a country’s economy over time. Overall, FTAs provide an avenue for stimulating economic activity through elimination of protectionist policies while providing greater choice for consumers at lower cost along with numerous benefits mentioned above that come along with it including better access into new markets while improving overall levels of efficiency within economies involved in these agreements thereby helping promote sustainable development globally through enhanced global economic integration among countries involved in FTAs .