Which of the following statements is correct?

Question

Quizplus · Accepted Answer

In a customs union, member nations apply a uniform external tariff on goods entering the union from non-member countries. This is different from a free-trade area where there are no tariffs on trade between member countries, but each member nation can set their own external tariffs. Option B is incorrect as harmonization of monetary and fiscal policies is a characteristic of a monetary union, not a free-trade area. Option C is incorrect as there are usually restrictions on factor movement (such as labor and capital) within a customs union. Option D is incorrect as a common market allows for both the free movement of goods and factors of production, which is a higher degree of integration than a customs union.

Which of the Following Statements Is Correct