Which of the following is the most highly integrated arrangement?

Question

a) A free-trade area.

b) A cusom union.

c) Economic Union

d) A common market.

Answer 1

Best answer is : c) Economic Union

[ A free trade area only allows exports and imports to take place freely, may be also subject to some restrictions on the list of goods/ services permitted under Free Tade agreement. A Customs union only provides for  integration of commonly agreed trade pact involving traffif policies and their implementation. A common market allows free movement of capital and labor and enterprise besides goods and services and therefore is more integrated than mere free trade and/ or Customs union. An Economic Union involves much greater economic integration involving coordination in monetary, exchange rate and fiscal policies etc besides common market.  Just see hoe European Economic Community operates with a common currency and a central bank for the countries in the Union. Economic Union is much closer to a Federal State except for political and social areas.