![]() Free movement of resources, but restricted movement of goods among the member countriesī. Harmonization of all economic policies in the member countries Which of the following is true of an economic union?Ī. There is free movement of capital and labor among the member countries. The member countries have identical monetary and fiscal policies.ĭ. The member countries do not import any good from the non-member countries.Ĭ. The member countries export similar products to the non-member countries.ī. There is free movement of capital and labor among the member countries Which of the following is true of a common market?Ī. Free movement of factors of production across the member nationsĭ.Harmonization of all economic policies D. Absence of any trade barriers among the member nationsĬ. Absence of any trade barriers among the member nations Which of the following features does a free trade area necessarily have?Ī. A trade bloc Which of the following allows member countries to import from other member countries freely, but imposes trade barriers against imports from outside countries?ĭ. Venezuela is a full member but has been suspended since December 1, 2016. Its full members are Argentina, Brazil, Paraguay and Uruguay. How are the rules of origin for NAFTA protectionist? (there are 2 ways) MERCOSUR A South American trade bloc established by the Treaty of Asunción in 1991 and Protocol of Ouro Preto in 1994. The rules can create local content requirements that provide protection for the area of producers of materials and components against rival suppliers of these materials and components from the outside area. They can create a nontariff barrier that hinders cross-member trade within the free-trade area.Ģ. The rules can limit the ability of firms in one member country to export freely to buyers in other member countries. NAFTA free trade agreement between Canada, the United States, and Mexico 1. Restrictions on people working in other member countries were generally removed, although there are still some limits on licensed professionals such as lawyers. Capital controls on the flows of financial investments were removed.ģ. It neutralized separate national product standards that had often been thinly disguised devices for protecting higher-cost domestic products against competition from firms in other member countries.Ģ. What are the 5 possible sources of additional gains from forming a trade bloc? major modern trade bloc The formation of the EU's customs union was the first. Forming the trade bloc increases opportunities for business investments. Consumers gain access to a larger number of varieties or models of a product.ĥ. Firms can lower costs by expanding their scale of production.Ĥ. An increase in competition can lower costs of production.ģ. An increase in competition can reduce prices.Ģ. What is the worst case scenario for countries in a trade bloc? 1. ![]() What is the best case scenario for countries in a trade bloc? One with inelastic import demands and high costs throughout the trade bloc. ![]() Economic failure of an embargo the embargo inflicts little damage on the target country's economy but possibly even great damage on the imposing country economic sanctions (embargoes) discriminatory restrictions or bans on economic exchange trade blocs and trade embargoes two kinds of trade barriers that are designed to discriminate free-trade area, customs union, common market, economic union 4 types of economic blocs One with costs that are almost as low somewhere within the bloc as in the outside world and highly elastic demands for imports.
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