IAI Actuarial Core Principles · Business Economics · Globalisation and multinational business
Several South Asian economies agree to remove tariffs among themselves while each keeps its own separate external tariff against non-members. Which type of trade bloc does this describe?
This describes a free trade area. Members abolish tariffs on trade among themselves but each keeps its own tariff policy toward outsiders. Having a common external tariff would make it a customs union instead.
- AFree trade areaCorrect
- BCustoms union
- CCommon market
- DEconomic and monetary union
- Preferential trading area with only partial tariff cuts
Explanation
A free trade area removes internal tariffs while each member retains its own external tariffs. A customs union would add a common external tariff. A common market adds free movement of factors, and monetary union adds a common currency. Option 4 is wrong because the tariffs are fully removed.
Did you get it right without looking?
One question tells you little. A timed set on Globalisation and multinational business shows your real accuracy, how long you take and where you lose marks.
More Globalisation and multinational business questions
- A multinational firm based in India invoices its exports to the United States in US dollars. Over the next quarter the rupee is expected to …
- Which of the following best describes a cost of globalisation for an economy through financial integration?
- A multinational insurer reports profit of 600 crore from its Indian subsidiary but, through high management fees and transfer pricing to its…
- A large Indian IT services firm expands by setting up delivery centres in several foreign countries. Which of the following is the most dire…
- India can produce either 60 tonnes of cloth or 30 tonnes of steel with a given resource base, and Vietnam can produce either 40 tonnes of cl…
- A multinational insurer sets up a large operations centre in an Indian city. Which of the following is a recognised cost, rather than a bene…