CHAPTER 65 COMMON MARKETS AND MONETARY UNIONS

Question 1

Common external tariff

Answer 1

A common tariff set by a group of countries imposed on imported goods from non-member countries.

Question 2

Common market

Answer 2

A group of countries between which there is free trade in products and factors of production, and which imposes a common external tariff on imported goods from outside the market.

Question 3

Free trade area

Answer 3

A group of countries between which there is free trade in goods and services but which allows member countries to set their own level of tariffs against non-member countries.

Question 4

Harmonization

Answer 4

Establishing common standards, rules and levels on everything from safety standards to tariffs, taxes and currencies.

Question 5

Monetary union or currency union

Answer 5

A group of countries that share a common currency like the euro.

Question 6

Optimum currency area

Answer 6

A group of countries where efficiency would be maximised by sharing a common currency.

Question 7

Trade creation

Answer 7

The switch from purchasing products from a high-cost producer to a lower-cost producer.

Question 8

Trade diversion

Answer 8

The switch from purchasing products from a low-cost producer to a higher cost producer.