CA Foundation · Business Economics · International Trade
Which of the following is the correct sequence of stages of regional economic integration, from the loosest to the deepest form?
The correct order from loosest to deepest is free trade area, customs union, common market and economic union. Each stage adds a layer: internal tariff removal first, then a common external tariff, then free factor movement, and finally harmonised economic policy.
- AFree trade area, customs union, common market, economic unionCorrect
- BCustoms union, free trade area, common market, economic union
- CCommon market, customs union, free trade area, economic union
- DFree trade area, common market, customs union, economic union
Explanation
Integration deepens step by step. A free trade area removes internal tariffs only. A customs union adds a common external tariff. A common market adds free movement of labour and capital. An economic union adds harmonised economic policies. Option B reverses the first two stages, and the other options also misplace the common market.
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