Trade creation is said to exist when the formation of a regional trading group leads to an expansion of trade above pre group levels.

Question

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Trade creation occurs when a regional trading group (like a free trade area or customs union) leads to an increase in trade among its members due to the removal of trade barriers, resulting in the consumption of more efficiently produced goods from within the group, as opposed to less efficiently produced goods from outside the group.

Trade Creation Is Said to Exist When the Formation of a Regional