Question

Q. Arrange the following in increasing order of economic integration:

Select the correct code from the options given below:

• A. 1-2-3
• B. 1-3-2
• C. 2-1-3
• D. 2-3-1

Answer 1

The correct option is A 1-2-3

Explanation:

Level of economic integration:

Free trade Area< Custom union< Common market

• A common market is a formal agreement where a group is formed amongst several countries that adopt a common external tariff. In a common market, countries also allow free trade and free movement of labor and capital among the members of the group. The trade arrangement is aimed at providing improved economic benefits to all the members of the common market.
• A customs union is an agreement between two or more neighboring countries to remove trade barriers, reduce or abolish customs duty, and eliminate quotas.
• A free trade area (FTA) refers to a specific region wherein a group of countries signs a trade agreement that seals the economic cooperation among them. The FTA’s main goals are to bring down barriers in trading, specifically tariffs and import quotas, and encourage the free trade of goods and services among its member countries.