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All questions of Regional Economic Cooperation for B Com Exam

Which form of economic grouping aims to remove trade barriers and establishes closer coordination and cooperation among member countries?
  • a)
    Monetary unions
  • b)
    Customs unions
  • c)
    Economic unions
  • d)
    Free trade areas
Correct answer is option 'D'. Can you explain this answer?

Dev Patel answered
Regional economic groupings aim to create a larger economic unit by removing trade barriers and establishing closer coordination and cooperation among member countries. Free trade areas, one form of economic grouping, focus on expanding trade activities among member countries by eliminating customs tariffs on products they produce themselves.
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Which form of economic grouping allows member countries to maintain their own trade policies with non-member nations?
  • a)
    Common markets
  • b)
    Customs unions
  • c)
    Economic unions
  • d)
    Free trade areas
Correct answer is option 'D'. Can you explain this answer?

Dev Patel answered
Free trade areas allow member countries to maintain their own trade policies with non-member nations. Participants aim to expand trade activities among themselves by eliminating customs tariffs on the products they produce themselves while maintaining their own external tariff on imports from third parties.

Which form of economic grouping allows for the free flow of goods, services, and factors of production across countries?
  • a)
    Free trade areas
  • b)
    Monetary unions
  • c)
    Customs unions
  • d)
    Common markets
Correct answer is option 'D'. Can you explain this answer?

Dev Patel answered
A common market allows for the free flow of not only goods but also services and factors of production such as capital, labor, and entrepreneurship across countries. It also establishes a common external tariff policy against third parties. Citizens of a common market can work and invest in any member country without any restrictions.

Which form of economic grouping establishes a central monetary authority and issues a common currency?
  • a)
    Economic unions
  • b)
    Free trade areas
  • c)
    Monetary unions
  • d)
    Customs unions
Correct answer is option 'C'. Can you explain this answer?

Dev Patel answered
A monetary union establishes a central monetary authority that determines monetary policy for all participating countries. It also issues a common currency to be circulated among the member countries. An example of a monetary union is the European Union, which introduced the single European currency (the Euro) in 1999.

What are the potential benefits of regional economic groupings?
  • a)
    Decreased exports and trade exchanges
  • b)
    Reduced investment and business opportunities
  • c)
    Improved balance of payments and decreased debt burden
  • d)
    Decreased production, productivity, and economic growth
Correct answer is option 'C'. Can you explain this answer?

Dev Patel answered
The potential benefits of regional economic groupings include improved balance of payments and decreased debt burden. These groupings aim to expand trade activities, attract foreign capital, and improve the overall economic performance of member countries. Increased exports, trade exchanges, and foreign investment can lead to a more favorable balance of payments and a decrease in the debt burden on member countries.

Which type of economic integration involves the removal of barriers to trade and the adoption of common economic policies?
  • a)
    Customs union
  • b)
    Economic union
  • c)
    Free trade area
  • d)
    Common market
Correct answer is option 'B'. Can you explain this answer?

Dev Patel answered
An economic union involves the removal of barriers to trade and the adoption of common economic policies. In an economic union, member countries maintain free trade in goods and services, set common external tariffs among members, allow the free mobility of capital and labor, and agree to harmonize their national economic policies to act as a single economic unit.

What is the primary goal of regional economic groupings?
  • a)
    Increase trade barriers
  • b)
    Establish closer coordination and cooperation among member countries
  • c)
    Restrict the flow of goods and services
  • d)
    Promote competition among member countries
Correct answer is option 'B'. Can you explain this answer?

Dev Patel answered
The primary goal of regional economic groupings is to establish closer coordination and cooperation among member countries. These groupings aim to create a larger economic unit by removing trade barriers, promoting trade activities, and facilitating the free flow of goods, services, and factors of production among member countries.

What is the weakest form of economic grouping?
  • a)
    Free trade areas
  • b)
    Customs unions
  • c)
    Preferential trade areas
  • d)
    Common markets
Correct answer is option 'C'. Can you explain this answer?

Dev Patel answered
A preferential trade area is the weakest form of economic grouping. In this type of grouping, member countries reduce customs tariffs in some product categories and apply preferential treatment to goods from member countries compared to the rest of the world. Higher tariffs remain in place for other product categories.

Which form of economic grouping involves the abolition or reduction of tariffs between member countries and the establishment of a common external tariff policy against third parties?
  • a)
    Free trade areas
  • b)
    Preferential trade areas
  • c)
    Customs unions
  • d)
    Economic unions
Correct answer is option 'C'. Can you explain this answer?

Dev Patel answered
A customs union is a form of economic grouping that involves the abolition or reduction of tariffs between member countries and the establishment of a common external tariff policy against third parties. In a customs union, member countries secure the free or privileged flow of tradable goods among themselves and form a discriminatory trade bloc against non-member countries.

What is the term used to describe the shift in trade direction in favor of member countries and against third parties in a regional economic grouping?
  • a)
    Trade diversion
  • b)
    Trade creation
  • c)
    Economic integration
  • d)
    Trade liberalization
Correct answer is option 'A'. Can you explain this answer?

Dev Patel answered
The term used to describe the shift in trade direction in favor of member countries and against third parties in a regional economic grouping is trade diversion. Trade diversion occurs when member countries prioritize trade with each other due to the removal of trade barriers, resulting in a shift away from trade with non-member countries.

Chapter doubts & questions for Regional Economic Cooperation - International Business 2025 is part of B Com exam preparation. The chapters have been prepared according to the B Com exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for B Com 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.

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