Economics 4.1.7 Flashcards
“What is a trading bloc?”
“A trading bloc is a group of countries that agree to reduce or eliminate barriers to trade among themselves.”
“What are the different levels of economic integration?”
“Levels of economic integration range from bilateral agreements to high integration in a monetary union.”
“What is a free trade area?”
“A free trade area is a bloc where countries abolish trade restrictions among themselves but maintain their own restrictions with other countries.”
“Give an example of a free trade area.”
“An example of a free trade area is the Canada–United States–Mexico Agreement (CUSMA).”
“What is a customs union?”
“A customs union is an agreement where member countries trade goods/services tariff-free and agree on common tariff rates for external countries.”
“How do countries in a customs union trade with each other?”
“Countries in a customs union trade freely among themselves while imposing common tariffs on imports from third-party countries.”
“What is a common market?”
“A common market allows tariff-free trade and free movement of the four factors of production among member countries.”
“What is the goal of a common market?”
“The goal of a common market is to improve resource allocation and lower production costs among its members.”
“What is a monetary union?”
“A monetary union combines the benefits of a customs union and common market while establishing a common currency and central bank.”
“What are the essential conditions for a successful monetary union?”
“Essential conditions include free movement of labor and similar trade cycles among member countries.”
“What is the significance of movement of labor in a monetary union?”
“Movement of labor should be free to minimize barriers, enhancing integration within a monetary union.”
“What should be similar among trade cycles in a monetary union?”
“Trade cycles of member countries should be similar to avoid tensions, particularly during economic crises.”
“What is meant by mobility of finance in a monetary union?”
“Mobility of finance means prices and wages should adjust freely according to market conditions.”
“What are fiscal transfers?”
“Fiscal transfers are automatic financial supports for countries performing poorly, crucial for stability in a monetary union.”
“What are some benefits of regional trade agreements?”
“Benefits include trade creation, elimination of tariffs, and simplified trading conditions.”
