Common Markets and Monetary Unions

Question 1

Common Market

Answer 1

A group of countries between which there is free trade and which impose a common external tariff on imported goods from outside the market.

Question 2

Common external tariff

Answer 2

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

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

Harmonisation

Answer 4

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

Question 5

Monetary/Currency Union

Answer 5

A group of countries that share a common currency eg 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.