Three Countries Enter into an Agreement to Remove All Tariffs

question 75

Multiple Choice

Three countries enter into an agreement to remove all tariffs and trade barriers between them. They decide on a common trade policy with regard to nonmembers. Faced with political backlash, the countries stop short of allowing mobility of factors of production such as labor and capital. Which of the following levels of economic integration best describes this arrangement?

• A)Political union
• B)Customs union
• C)Common market
• D)Economic union
• E)Monetary union

---

Definitions:

Net Cash

Represents the total cash earnings minus cash expenses over a period, highlighting the company's ability to generate cash from its operations.

Investing Activities

Investing activities are transactions involving the purchase and sale of long-term assets and other investments not considered as cash equivalents.

Net Cash

The difference between a company's total cash inflows and outflows.

Operating Activities

Day-to-day actions that relate to producing goods, providing services, and selling merchandise to customers, which are reflected in a company's cash flows.