According to Alexander Yeats:
A)the trade diversion effects of MERCOSUR outweigh its trade creation effects.
B)the fastest growing items in intra-MERCOSUR trade were capital-intensive goods produced efficiently in the member countries.
C)MERCOSUR countries will be able to compete globally once the group's external trade barriers come down.
D)countries with more efficient manufacturing enterprises are getting a level playing field because of MERCOSUR's reduction in trade barriers.

Question

Quizplus · Accepted Answer

Alexander Yeats argued that the trade diversion effects of MERCOSUR, which occur when trade shifts from more efficient global producers to less efficient regional ones due to preferential treatment, outweigh the trade creation effects, which are the benefits from increased trade among member countries.