Chapter 9: Regional Economic Integration
What are the costs of the euro?
1) National authorities have lost control over monetary policy 2) Not optimal currency area
What is a characteristic of a free trade area?
1) No or little trade barriers
What are the characteristics of a customs union?
1) No or little trade barriers 2) A common external trade policy
What are the characteristics of a commons market?
1) No or little trade barriers 2) A common external trade policy 3) Free movement of factors of production
What are the characteristics of an economic union?
1) No or little trade barriers 2) A common external trade policy 3) Free movement of factors of production 4) A common currency, a common monetary and fiscal policy
What are the characteristics of a political union?
1) No or little trade barriers 2) A common external trade policy 3) Free movement of factors of production 4) A common currency, a common monetary and fiscal policy 5) A central political organization
What are the benefits of the euro?
1) Significant savings 2) Easier to compare prices across Europe 3) Increased competition, which produces long-run gains in economic efficiency 4) Boost to the development of a highly liquid pan-European capital market 5) Increase range of investment options open to both individuals and institutions
What is the free trade area?
All barriers to the trade of goods and services among member countries are removed
What is an example of a customs union?
Andean community
What does ASEAN stand for?
Association of Southeast Asian Nations
Who are the member countries of ASEAN?
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Phillipines, Singapore, Thailand, Vietnam
What is the political union?
Central political apparatus which coordinates the economic, social, and foreign policy of the member states
What are examples of a free trade area?
EFTA, NAFTA
What is an example of an economic union?
EU (imperfect)
What is the customs union?
Eliminates trade barriers between member countries and adopts a common external policy
What is the objective of ASEAN?
Foster free trade among member countries and to achieve cooperation in their industrial policies
What is the common market?
Has no barriers to trade among member countries
What are examples of a political union?
USA, future of EU?
What is the economic union?
Involves free flow of products and factors of production among member countries
"The Establishment of the Euro"
Maastricht Treaty (1992)- EC members committed to adopting a common currency on January 1, 1999
What is an example of a commons market?
Mercosur
What are the trade blocs that the US is a member of?
NAFTA, Asia-Pacific Economic Cooperation
