Question
Match the items of List - I with List - II and choose the correct code of combination :List - I List - II (a) It abolishes all restrictions on trade among the members (i) Common Market (b) It not only eliminates all restrictions on trade among members but also adopts a uniform commercial policy against the non-members (ii) Economic Union (c) It allows free movement of labour and capital within the common market (iii) Free Trade Area (d) It achieves some degree of harmonization of national economic policies, through a common central bank, unified monetary and fiscal policy, etc. (iv) Customs Union
The correct answer is
(a)-(iii), (b)-(iv), (c)-(i), (d)-(ii)
Matching Economic Integration Concepts
This question requires matching definitions of different levels of economic integration from List I with their corresponding terms in List II.
| List I Description | List II Term |
|---|---|
| (a) It abolishes all restrictions on trade among the members | (iii) Free Trade Area |
| (b) It not only eliminates all restrictions on trade among members but also adopts a uniform commercial policy against the non-members | (iv) Customs Union |
| (c) It allows free movement of labour and capital within the common market | (i) Common Market |
| (d) It achieves some degree of harmonization of national economic policies, through a common central bank, unified monetary and fiscal policy, etc. | (ii) Economic Union |
Explanation of Matches
- Free Trade Area (FTA): Members eliminate internal trade barriers (like tariffs and quotas) among themselves but maintain individual trade policies with non-member countries. This matches item (a).
- Customs Union: Similar to an FTA, but members also adopt a common external trade policy (common tariff) towards non-member countries. This matches item (b).
- Common Market: Extends a customs union by allowing for the free movement of factors of production, such as labor and capital, among member countries. This matches item (c).
- Economic Union: Represents a deeper level of integration. It includes the features of a common market and further harmonizes economic policies, often involving a common currency, central bank, and unified fiscal/monetary policies. This matches item (d).
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Important Questions from Regional Economic Integration
- SAFTA (South Asian Free Trade Agreement) categorises member nations as Non-Least Developed Contracting States (NLDCS) and Least Developed Contracting States (LDCS). Identify the NLDSC states from the following
A. Bangladesh
B. Pakistan
C. Bhutan
D. India
E. Sri Lanka
Choose the correct answer from the options given below: - Common market achieves uniformity in monetary policy and fiscal policy among the member countries in __________.
- Identify the correct statement.
- Match List-I with List-II relating to benefits and cost of economic integration and identify the code representing correct matching.Codes :
List – I List – II a. Trade creation i. Movement of production and resources in opposite directions. b. Trade diversion ii. Become active when a member country does not augment export but simply shifts its imports from low cost source to high cost source. c. Trade deflection iii. Shifting the locus of production from high cost to low cost centre within the union. d. Polarisation forces iv. Goods produced in a third country entering a free trade area through a member country having lower tariff. - What is the situation referred to as, amongst the following, when intra-region trade is duty free but there is variation in tariff structure for import from a third country ?
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