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13 Sep 2024, 12:09
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Trading Blocs are large regions where impediments to trade, such as tariffs or regulations, are reduced or completely removed in order to facilitate trade. Economic Unions are trading blocs where countries share a common market such that goods can move freely between the countries, and a Customs Union such that the countries share common external tariffs, which combined creates a large and unified trade region. Monetary Unions are agreements where the involved countries share the same currency, but do not necessarily have to cooperate any further than that. The European Union is an example of an Economic and Monetary Union, so countries within are tied together strongly, and have the advantage of being supported by one other.
In contrast to Economic and Monetary Unions, Multilateral Free Trade areas are trading blocs that only enjoy reduced tariffs and regulations towards exchanged goods. NAFTA, AANZFTA, and TPP are examples of Multilateral Free Trade areas, where countries ratify agreements to reduce trade barriers. While Economic Unions have greater cooperation within their bloc, they lose more individuality and sovereignty than countries in Free Trade Areas.
Some economists argue that while trading blocs increase regional trade, they simultaneously reduce global trade, as trading blocs set up their own self-reliant economies and markets. Over the long term, this can reduce global cooperation, and perpetuate inequality between some global markets.
If a country leaves an Economic and Monetary Union within which the vast majority of its international trade takes place, which of the following is least likely to occur?
A)Businesses in the country will become more competitive with businesses within the Union, since they are held back by less regulations.
B)Markets within the Union will shrink slightly, since their access to goods produced by the country that leaves will be more limited.
C)Laborers working in the country, but who are from the Union, will overall make less, since they will experience stricter regulations.
D)The relationship between the country that leaves and the countries that remain will weaken.
E) Since the Union’s market will become less competitive, corporations within will begin producing larger revenues.
In contrast to Economic and Monetary Unions, Multilateral Free Trade areas are trading blocs that only enjoy reduced tariffs and regulations towards exchanged goods. NAFTA, AANZFTA, and TPP are examples of Multilateral Free Trade areas, where countries ratify agreements to reduce trade barriers. While Economic Unions have greater cooperation within their bloc, they lose more individuality and sovereignty than countries in Free Trade Areas.
Some economists argue that while trading blocs increase regional trade, they simultaneously reduce global trade, as trading blocs set up their own self-reliant economies and markets. Over the long term, this can reduce global cooperation, and perpetuate inequality between some global markets.
If a country leaves an Economic and Monetary Union within which the vast majority of its international trade takes place, which of the following is least likely to occur?
A)Businesses in the country will become more competitive with businesses within the Union, since they are held back by less regulations.
B)Markets within the Union will shrink slightly, since their access to goods produced by the country that leaves will be more limited.
C)Laborers working in the country, but who are from the Union, will overall make less, since they will experience stricter regulations.
D)The relationship between the country that leaves and the countries that remain will weaken.
E) Since the Union’s market will become less competitive, corporations within will begin producing larger revenues.
13 Sep 2024, 12:34
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I’d go with E.......Market will become less competitive but market size will also decrease considering one of countries has left... taking away its goods and its market share with it. Which should mean that it isn’t necessarily true that the corporations within the Union countries will begin having larger revenues.
[C is also interesting but E just looks much more unlikely whereas I can make a case for C to happen]
[C is also interesting but E just looks much more unlikely whereas I can make a case for C to happen]
13 Sep 2024, 13:11
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The answer will be A.
Economic and monetary union reduces tarrifs and hence reduces the price of the products.
If a country leaves the union , businesses in the country will NEVER become more competitive with businesses within the union because those countries’ products may be charged higher tarrifs ( they are not tied anymore with the country that left ) and may cost more .
Wat do you think ?
verbal experts !!
Economic and monetary union reduces tarrifs and hence reduces the price of the products.
If a country leaves the union , businesses in the country will NEVER become more competitive with businesses within the union because those countries’ products may be charged higher tarrifs ( they are not tied anymore with the country that left ) and may cost more .
Wat do you think ?
verbal experts !!
