Chapter 44, Problem 7MCQ

To determine

The correct option for the trade agreement.

Answer to Problem 7MCQ

Option b is correct.

Explanation of Solution

Explanation for the correct option:

b.

Trade agreements increase the regulation to safeguard the interest of the nations involved in the trade. It makes all the regulations clear under which trade occurs. Therefore, option b is correct.

Explanation for incorrect options:

a.

The increase in tariffs is not the concern of the trade agreement but it is more concerned about reducing export barriers. Therefore, option a is the incorrect answer.

c.

Trade agreements are not concerned about decreasing trade impediments. Therefore, option c is incorrect.

d.

Trade agreements are signed to ensure that trade barriers are reduced rather than enactment of quotas. Therefore, option d is incorrect.

e.

A major concern of trade agreements is to ensure free trade across the nation instead of instigating wars. Therefore, option e is incorrect.

Economics Concept Introduction

International trade: International trade is an exchange of goods and services across nations. This is due to globalization and comparative advantage. It means goods are produced in one country and are sold in some other country.