Trade creation occurs when the establishment of a trade bloc diverts trade from low-cost global suppliers, to higher cost member nations.

Question

Quizplus · Accepted Answer

Trade creation occurs when the establishment of a trade bloc leads to increased trade and lower prices due to the removal of trade barriers between member nations. This can lead to increased competition and the development of more efficient industries within the bloc. It does not divert trade from low-cost global suppliers to higher cost member nations.

Trade Creation Occurs When the Establishment of a Trade Bloc