In which of the following types of economic integration systems will the establishment of a common currency be possible?
A) Customs union
B) Economic union
C) Free trade area
D) Common market

Question

In which of the following types of economic integration systems will the establishment of a common currency be possible? 
A) Customs union 
B) Economic union 
C) Free trade area 
D) Common market

Quizplus · Accepted Answer

The establishment of a common currency requires a higher level of economic integration which is only possible in an economic union where member countries not only remove trade barriers but also coordinate and integrate their economic policies, including monetary policy. In this way, member countries can adopt a common currency and a common central bank to manage fiscal and monetary policies. In contrast, customs union, free trade area, and common market do not require the adoption of a common currency.

In Which of the Following Types of Economic Integration Systems