Question

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What are the five levels (from lowest to highest) of regional economic integration? Explain.

The lowest level of economic integration is Free Trade. Free trade area seek to remove all barriers to trade among themselves but where each country determines its own barriers against nonmembers. The next degree of integration is Customs Union. Customs union includes Free trade guidelines but sets common trade policy against nonmembers. The next degree of integrations is Common Market.  Common market includes both Free Trade and Customs Union while adding free movement of labor and capital while maintaining set common trade policy against nonmembers. The forth degree which includes the first three degrees is Economic Union.  Economic Union requires members to harmonize their tax, monetary and fiscal policies, create a common currency, and concede some sovereignty to the large organization. The greatest degree of integration is Political Union. Political Union includes all four degrees and requires members to coordinate their economic / political policies against nonmembers, with a few exceptions.

What is the purpose of the international capital market?

International capital market is defined as a network of individual, companies, financial institutions and governments that invest and borrow across national boundaries. In short terms international capital markets is a conduit for joining borrowers and lenders in different national markets.

What are the main advantages of the gold standard?

They are three main advantages of the gold standard: Drastically reduce the risk in exchange rates because it maintain highly fixed exchange rates between currencies. Imposed strict monetary policies on all countries that participated in the system. Last but not least is the gold standard Helped correct a nation’s trade imbalance.

Answer 1

This post nicely describes levels of regional economic integration starting from free trade to Political Union. All the necessary elements of this integration are mentioned in the post.

The post next talks about International Capital Market and describes what is it, then the advantages of the Gold Standard is explained briefly in the last part of the post.

What I like about this post is that it is short yet sufficient to explain the concept which is discussed in it.