Question

Countries A, B, and C are at a particular level of economic integration. All these countries enjoy reduced or eliminated internal tariffs on trade between them and have added a common external tariff on products imported from countries outside the union. If these countries remove all restrictions on the free flow of capital and labor among themselves, they represent a:

Answer 1

Customs union.

Step-by-step explanation:

If countries A, B, and C remove all restrictions on the free flow of capital and labor among themselves, they represent a customs union. Customs union is an agreement between countries to reduce internal tariffs of trade between the countries members of the union. The countries that are members may apply a common external tariff on products imported from countries outside the union.