________ is said to exist when the formation of a regional trading group leads to the reduction of trade with nonmember countries in favor of member countries.

Question

Quizplus · Accepted Answer

Trade diversion occurs when the formation of a regional trading group diverts trade from countries outside the group to member countries within the group, creating a distortion in trade patterns. Trade creation, on the other hand, refers to the situation where the elimination of trade barriers leads to an increase in trade among member countries. Trade exclusion and trade distortion are not accepted terms in economics.

________ Is Said to Exist When the Formation of a Regional