The main difference between a free trade area and a customs union is that the members of a customs union ________.
A)agree to the free movement of all factors of production
B)harmonize their tax,monetary,and fiscal policies and create a common currency
C)agree to treat trade with all nonmember nations in a similar manner
D)accept a common stance on economic and political policies regarding nonmember nations

Question

Quizplus · Accepted Answer

The main difference between a free trade area and a customs union is that while members of a free trade area maintain their own policies towards nonmember countries, members of a customs union agree to treat trade with all nonmember nations in a similar manner. Harmonization of tax, monetary, and fiscal policies and creation of a common currency is a characteristic of an economic union, while free movement of factors of production is a characteristic of a common market. Accepting a common stance on economic and political policies regarding nonmember nations is not necessarily a characteristic of either a free trade area or a customs union.

The Main Difference Between a Free Trade Area and a Customs