Chapter 8

Question 1

economic integration

Answer 1

Eliminating restrictions on international trade, payments, and factor mobility.

Question 2

free-trade area

Answer 2

Association of trading nations in which members agree to remove all tariff and non tariff barriers among themselves. (e.g.. NAFTA)

Question 3

customs union

Answer 3

An agreement between two or more trading partners to all tariff and non tariff barriers, as well as each nation imposes identical trade restrictions against nonparticipants. (Eg Benelux)

Question 4

common market

Answer 4

A group of trading nations that permit

1. Free movement of goods and services among member nations
2. The initiation of common external trade restrictions against nonmembers
3. Free movement of factors of production across national borders within the economic bloc. (eg. EU)

Question 5

economic union

Answer 5

national, social, taxation, and fiscal policies are harmonized. (belgium and Lux in the 20s).

Question 6

monetary union

Answer 6

Ultimate economic union. Common currency. (eg. US, because of the states).

Question 7

Maastricht Treaty

Answer 7

Set a date for the EU currency to happen.

Question 8

common agricultural policy

Answer 8

Support of prices received by farmers for their produce.

PROBLEM: They differ across countries.

Question 9

optimum currency area

Answer 9

region in which it is economically preferable to have a single official currency rather than multiple ones.

Question 10

transition economies

Answer 10

centrally planned -> market economy.