A regional free trade agreement will benefit the world only if

5. A regional free trade agreement will benefit the world only if: A. it raises the standard of living in one of the member countries. B. the amount of trade it creates exceeds the amount it diverts. C. the currencies of the nations involved appreciate. D. the balance-of-trade situation remains stable in the region. E. it creates trade surplus for one of the countries involved.

Answer

B is Correct, Trade Creation is High cost producers being replaced by low cost producers and diversion occurs when high replaces low. FTA is allowed to benefit the consumers who end up paying higher for the same amount of goods and services.

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