EU

Question 1

What is a customs union

Answer 1

a group of states that have agreed to charge the same tariffs on foreign countries, and have also agreed to trade freely with each other

Question 2

What is a Free Trade Area

Answer 2

• a grouping of countries which have agreed to trade freely with each other, therefore without any protectionist policies such as import duties on their goods that they trade between each other
• distinguished from a customs union in tha they have not agreed to have a trade policy towards foreign countries
• e.g., NAFTA - North American Free Trade Agreement

Question 3

What is a common market, and give an example

Answer 3

Common Market
- the same as a customs union, plus an extension
- a group of countries where there are few or no duties between them, and a joint external tariff imposed.
- the common market allows not only for the free movement of goods and services, but also of labour and capital
- EU single market for eg

Question 4

define a monetary union

Answer 4

Monetary union
- an agreement between a group of countries, where monetary policy may be delegated to a central authority
- the countries within the union share the same currency
- for instance, the Eurozone

Question 5

Define the Eurozone

Answer 5

Eurozone
- group of 19 member states that have all adopted the euro as their currency
- monetary authority has been delegated to the ECB

Question 6

EU possible 10/20 markers

1. Explain the main features of a single market, such as that which exists within the EU (10)
2. Evaluate the possible economic costs and benefits to an EU member state of being part of the EU single market (20)
3. ETVT further enlargement of the EU would be beneficial to an EU existing member state (20)
4. Evaluate the extent to which individuals and firms in a EU member state benefit from membership of the EU (20)
5. Explain how membership of a customs union, such as the EU, affects the pattern and volume of trade between countries (10)
6. Evaluate the costs and benefits for a country of joining a currency union, such as the eurozone

Question 7

why is a common external tariff policy within a customs union important?

Answer 7

It prevents one country from undercutting another’s trade policy, and therefore gaining more revenue as more countries will export to teh country with the lower import duty