What is the difference between a free-trade area and a customs union? Provide a real-world example of each.
What will be an ideal response?
POSSIBLE RESPONSE: A free-trade area is a type of economic bloc in which members remove trade barriers among themselves, but keep their separate national barriers against trade with the outside world. Most trade blocs operating today are free-trade areas. One example is the North American Free Trade Agreement (NAFTA), which formally began at the start of 1994. A customs union is a type of economic bloc in which members remove barriers to trade among themselves and adopt a common set of external barriers. The European Economic Community (EEC) from 1957 to 1992 included a customs union along with some other agreements. The Southern Common Market (MERCOSUR), formed by Argentina, Brazil, Paraguay, and Uruguay in 1991, is actually a customs union.
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The required reserve ratio is the minimum percentage of ________ that banks are required to hold by regulation
A) reserves as total assets B) deposits as total assets C) reserves as deposits D) deposits as reserves E) reserves as total liabilities
Because unemployment is a macroeconomic topic, an increase in unemployment would not be expected to have any impact on the equilibrium price or quantity in the market for an individual good
Indicate whether the statement is true or false
Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will
a. lower the standard of living in both countries. b. raise the standard of living in both countries. c. make some workers less efficient. d. lead to an inappropriate allocation of resources.
If a natural monopoly is regulated using the marginal cost pricing rule, how does the regulation affect prices, outputs, profits, and the distribution of surpluses? What are the pros and cons to this method of regulation?
What will be an ideal response?