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    Question

    An agreement involving cooperation between at least two countries to reduce trade barriers – import quotas and tariffs – and to increase trade of goods and services with each other, is known as?

    A Trade Bloc Correct Answer Incorrect Answer
    B Open Border Correct Answer Incorrect Answer
    C Free Trade Area Correct Answer Incorrect Answer
    D Customs Union Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    A free-trade area is the region encompassing a trade bloc whose member countries have signed a free-trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers – import quotas and tariffs – and to increase trade of goods and services with each other. If people are also free to move between the countries, in addition to a free-trade agreement, it would also be considered an open border. It can be considered the second stage of economic integration.

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