In the following table, indicate whether each statement about regional trade agreements is true or false. Statement True False о Under regional trade agreements, several countries eliminate tariffs among themselves and lower tariffs against all other countries. Regional trade agreements are consistent with GATT's most favored nation principle. Each NAFTA member country keeps its own tariffs with the countries outside NAFTA. If China wants to sell a good to Canada, it can first export it to the United States, where the tariff is lower, and then ship it duty- free to Canada. Countries that enter into a free trade area agreement maintain a common schedule of tariffs with countries outside the agreement. Rules of origin are not needed in a customs union. O

In the following table, indicate whether each statement about regional trade agreements is true or false. Statement True False о Under regional trade agreements, several countries eliminate tariffs among themselves and lower tariffs against all other countries. Regional trade agreements are consistent with GATT's most favored nation principle. Each NAFTA member country keeps its own tariffs with the countries outside NAFTA. If China wants to sell a good to Canada, it can first export it to the United States, where the tariff is lower, and then ship it duty- free to Canada. Countries that enter into a free trade area agreement maintain a common schedule of tariffs with countries outside the agreement. Rules of origin are not needed in a customs union. O

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 1CQQ

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If a nation lhat does not allow international trade insteel has a domestic price of steel lower than I heworld price, then~ the nation has a comparative a dvan ta~e in oroduc·ing steel and would become a steel exporter if ilopened up trade.h. the nation has a comparative a dvan ta~e in oroduc·ing steel and would become a steel importer if ilopened up trade.c. the nation does not have a comparative advantagein producing steel and would become a steelexporter if it opened up trade.rl. the nation does not have a comparative advantagein producing steel and would become a steelimporter if it opened up trade.
nave a n ab je in bothi good because they both produce boots and shirts. 40- 38- 36- B. Neither country has an absolute advantage in both goods because the United States can produce more boots but Canada can produce more shirts. 34- 32- 30- 28- 26- 24- 22- 20- 18- 16- 14- 12- 10- 8- C. The United States has an absolute advantage in both goods because it can produce more boots and more shirts. PPFUS. D. Neither country has an absolute advantage in both goods because Canada can produce more boots but the United States can produce more shirts. O E. Canada has an absolute advantage in both goods because it can produce more boots and more shirts. US 6- Suppose initially that the United States is consuming 4 boots and 8 shirts and Canada is consuming 18 boots and 2 shirts, as indicated in the figure. Then, suppose the United States and Canada specialize by each only producing the good for which they have a comparative advantage and then trade. In particular, suppose the United States trades…
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