3.3 Globalisation (Globalisation and the International Economy)

Question 1

globalisation

Answer 1

globalisation is a process that causes economies to become more inter-connected due to the increasing flow of goods and services, labour and capital

Question 2

free trade area

Answer 2

a free trade area refers to a trade bloc whose member countries have abolished all tariff and non-tariff barriers among themselves but each can retain whatever restrictions she wants for non-member countries

Question 3

customs union

Answer 3

a customs union refers to a trade bloc where two or more countries agree to free all internal trade barriers and to also levy a common set of external trade barriers against non-member countries. eg southern African customs union (SACU) and the gulf cooperation council (GCC)

Question 4

common market

Answer 4

a common market is where member countries operate as a single market. over and above trade liberalisation under a custom union, a common market would also include free movement of labour and capital

Question 5

monetary union

Answer 5

a monetary union refers to a common market which also adopts a common currency. this requires the synchronisation of monetary policy and, to a lesser extent, fiscal policy between members