48 exam-style questions on Economic integration — topic 4.4 of The global economy in the IB Economics syllabus — with answers and explanations. Samples below; the full set is free with an account.
Which sequence lists the stages of economic integration from the loosest to the deepest form?
Answer: Free trade area → customs union → common market → monetary union
Integration deepens as each stage adds a new feature: a free trade area removes internal barriers, a customs union adds a common external tariff, a common market adds free movement of factors, and a monetary union adds a shared currency.
Which feature distinguishes a common market from a customs union?
Answer: Free movement of labour and capital between member countries
A common market includes everything a customs union has, plus free movement of the factors of production (labour and capital) between members; a single currency only comes with monetary union.
After a trading bloc is formed, purchases shift from a high-cost domestic producer to a lower-cost producer located in a member country. This is an example of
Answer: trade creation
Trade creation occurs when bloc membership moves production from a higher-cost source to a lower-cost source within the bloc, improving allocative efficiency and welfare.
Which of the following is a core function of the World Trade Organization (WTO)?
Answer: A forum for trade talks and dispute settlement
The WTO administers the rules of world trade, hosts trade negotiations and operates a dispute-settlement system; development lending is the World Bank's role and it sets no common tariff.
For a country joining a monetary union, the most significant economic cost is likely to be
Answer: the loss of an independent monetary policy and exchange rate
With a shared currency and central bank, a member can no longer set its own interest rates or let its exchange rate adjust to country-specific shocks; conversion costs and price opacity actually fall.
In a free trade area, unlike in a customs union, member countries
Answer: retain their own independent trade policies toward non-members
Free trade area members abolish barriers among themselves but each keeps its own external tariff, whereas a customs union requires a common external tariff and a common trade policy.
That was 6 of 48 Economic integration questions.
Practise all 48 freeA student writes: "Joining a customs union must raise a country's welfare, because tariffs on member goods are abolished and total trade increases." Which step is unjustified?
See the correction →StateAO1 · 1–2 marks
One word or one short sentence. No explanation, no working: the mark is for the fact itself.
DefineAO1 · 1–2 marks
Give the precise meaning — one sentence, the key terms in it, no example needed unless asked.
DistinguishAO2 · 2–10 marks
Make the difference clear for BOTH terms — a definition of one of them is only half an answer.
48 Economic integration questions — free with an account. Spaced repetition, streaks and full exam simulations included.
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