What was the primary significance of the North American Free Trade Agreement (NAFTA) in the context of economics?

• A. It created a political union among the three countries.
• B. It replaced the World Trade Organization for North American countries.
• C. It eliminated most tariffs and trade barriers between the United States, Canada, and Mexico.
• D. It established a single currency for North America.

Answer: (C)

Verified step by step guidance

1. Understand the context of NAFTA: It is a trade agreement between the United States, Canada, and Mexico.
2. Recall the main purpose of trade agreements: They typically aim to reduce or eliminate barriers to trade such as tariffs, quotas, and import restrictions.
3. Identify what NAFTA specifically did: It focused on eliminating most tariffs and trade barriers among the three member countries to encourage free trade.
4. Recognize what NAFTA did not do: It did not create a political union, replace the World Trade Organization, or establish a single currency.
5. Conclude that the primary significance of NAFTA in economics is its role in promoting free trade by removing tariffs and trade barriers between the member countries.