Question

A group of nations establishes a free-trade zone. What is the most likely effect?

a. Cost of trade increases
b. Exports decrease
c. Imports decrease
d. Trade increases

Answer 1

The answer is

d. Trade increases

Since free trade is trade without limitations (like tariffs, quotas and regulations) there will be an increase in trade activity.

Hope this helps! Let me know if you have any questions :)

Answer 2

The most likely effect is that both imports and exports (which are the same thing, just seem from different points of view) increase, and in short: trade increases (option d).