4.1.5 Trading Blocs

    Cards (31)

    • What is a trading bloc?
      A group of countries
    • Trading blocs increase trade with non-member countries.
      False
    • One advantage of trading blocs is lower prices for consumers.
    • What type of sovereignty may be lost when joining a trading bloc?
      Economic sovereignty
    • Trading blocs enhance bargaining power in global trade.
    • Order the types of trading blocs from lowest to highest level of economic integration.
      1️⃣ Free Trade Area
      2️⃣ Customs Union
      3️⃣ Common Market
      4️⃣ Economic Union
    • What distinguishes a Free Trade Area from other trading blocs?
      Maintains own trade policies
    • A Common Market extends a Customs Union by allowing free movement of labor and capital.
    • Match the type of trading bloc with its key characteristic.
      Free Trade Area ↔️ Removes internal trade barriers
      Customs Union ↔️ Common external trade policy
      Common Market ↔️ Free movement of labor and capital
      Economic Union ↔️ Coordinates economic policies
    • Increased trade among member countries leads to economic growth within a trading bloc.
    • Greater bargaining power in global trade allows for better terms with non-member countries.
    • What does access to larger markets foster for businesses within a trading bloc?
      Economies of scale
    • Joining a trading bloc can result in a loss of economic sovereignty.
    • Trading blocs can lead to increased competition for domestic industries.
    • What type of trade diversion can occur within a trading bloc?
      From efficient non-members
    • Order the types of trading blocs from lowest to highest level of economic integration.
      1️⃣ Free Trade Area
      2️⃣ Customs Union
      3️⃣ Common Market
      4️⃣ Economic Union
    • A Free Trade Area eliminates trade barriers but allows each member to maintain its own external trade policies
    • A Customs Union adopts a common external trade policy.
    • What two factors are freely mobile in a Common Market?
      Labor and capital
    • An Economic Union integrates all Common Market features and coordinates economic policies
    • Increased trade is an advantage of trading blocs.
    • What are two economic effects of increased trade in trading blocs?
      Higher GDP and employment
    • Trading blocs enhance bargaining power in global trade negotiations.
    • Match the advantage of trading blocs with its description:
      Lower prices ↔️ Reduced tariffs and market access
      Greater economies of scale ↔️ Access to larger markets
      Economic growth ↔️ Increased trade volumes
    • Trade diversion occurs when trade shifts from more efficient non-member countries to less efficient member countries.
    • What may member countries lose when aligning their policies with a trading bloc?
      Economic sovereignty
    • Loss of economic sovereignty means member countries must align their policies with the bloc
    • Order the effects of trading blocs on global businesses from most positive to least positive.
      1️⃣ Increased Market Access
      2️⃣ Economies of Scale
      3️⃣ Greater Bargaining Power
      4️⃣ Complexity and Compliance Costs
      5️⃣ Loss of Sovereignty
    • Match the effect of trading blocs with its description:
      Trade Diversion ↔️ Shift to less efficient member countries
      Reduced Trade Barriers ↔️ Lower tariffs and streamlined regulations
      Complexity and Compliance Costs ↔️ Adhering to trading bloc regulations
    • Businesses within trading blocs face increased competition.
    • Trading blocs provide substantial opportunities for growth but also pose challenges for businesses.