Scenario: Moonland Union
Twenty-six nations of Moonland region, have decided to cooperate with one another to eliminate trade barriers among them and create the Moonland Union. They are not sure, however, to what extent they want to cooperate.
-As a first stage of cooperation,the countries agree to remove all barriers to trade among themselves.Each country also maintains policies it sees fit against nonmembers.At this stage,Moonland Union can be described as a ________.
A) free trade area
B) political union
C) common market
D) customs union

Question

Quizplus · Accepted Answer

At this stage, the Moonland Union only removes trade barriers among its member countries, but each country still maintains its own policies against nonmembers. This aligns with the characteristics of a free trade area, where member countries eliminate trade barriers among themselves but do not have a common trade policy against nonmembers. A political union involves a closer integration of member countries' governments, which is not suggested in this scenario. A common market would involve not only removing trade barriers but also allowing free movement of factors of production, which is not mentioned in the scenario. A customs union involves not only a removal of trade barriers but also a common trade policy against nonmembers, which is not the case in the Moonland Union at this stage.

Scenario: Moonland Union Twenty-Six Nations of Moonland Region, Have Decided to Cooperate with to Cooperate