Because of NAFTA, the U.S. shifts some of its imports from Europe to Mexico (a member of NAFTA). This is an example of
A) trade deflection.
B) trade diversion.
C) protectionism.
D) rules of origin.
Answer: B
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Between 1981 and 2012, the United States
A) had a current account surplus almost every year. B) some years had a deficit and some years had a surplus that totaled a surplus of $2.5 trillion. C) had a current account surplus or deficit that almost equal to $0 every year. D) had a current account deficit almost every year. E) some years had a deficit and some years had a surplus that netted out to $0.
The typical production possibilities curve is bowed outward due to
a. constant opportunity costs. b. increasing opportunity costs. c. decreasing opportunity costs. d. technological innovations.
The Friedman—Phelps analysis shows that a negative relationship between inflation and unemployment holds
A) even when expected inflation changes. B) even when the natural rate of unemployment changes. C) even if both the expected inflation rate and the natural rate of unemployment change. D) as long as the expected inflation rate and the natural rate of unemployment are approximately constant.
A major Internet service provider decides to spend $70 million to purchase new server equipment. If the marginal propensity to consume is 0.8, the eventual change in GDP will be
a. $40 million. b. $50 million. c. $90 million. d. $350 million. e. $850 million.