Suppose a new EU member begins substituting its imports from non-EU members to other EU members. This is an example of
A) trade diversion.
B) trade deflection.
C) free trade.
D) trade detection.

Question

Quizplus · Accepted Answer

This scenario describes trade diversion, which occurs when a country shifts its imports from a lower-cost source outside a trading bloc to a higher-cost source within the bloc, often due to the implementation of preferential trade agreements or tariffs.

Suppose a New EU Member Begins Substituting Its Imports from Non-EU