Skip to content

ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business

Country A and Country B form a trading bloc. They remove all tariffs between themselves, apply one common external tariff to imports from other countries, and also allow free movement of labour and capital between them. Which stage of economic integration best describes this?

This is a common market. It has no internal tariffs and a common external tariff, like a customs union, but also allows free movement of labour and capital. A monetary union would need a shared currency, which is not described.

  1. AFree trade area
  2. BCustoms union
  3. CCommon marketCorrect
  4. DMonetary union

Explanation

Removing internal tariffs plus a common external tariff makes a customs union. Adding free movement of factors of production such as labour and capital makes it a common market. A monetary union would additionally require a single currency, which is not mentioned.

Did you get it right without looking?

One question tells you little. A timed set on Political and legal factors affecting business shows your real accuracy, how long you take and where you lose marks.

Practise Political and legal factors affecting businessFree diagnostic mock

More Political and legal factors affecting business questions