Final answer:
Countries must give up some political power and autonomy in economic unions, including control over monetary policy, trade policy, and fiscal policy.
Step-by-step explanation:
In order to be members of an economic union, countries must give up some political power and autonomy. Examples of political power that countries must relinquish include:
- Monetary Policy: In economic unions like the Eurozone, member countries give up the ability to independently set their own monetary policy. Instead, a central bank, such as the European Central Bank, makes decisions regarding interest rates and the supply of money for all member countries.
- Trade Policy: Countries in an economic union typically give up the authority to negotiate and implement their own trade agreements. Instead, the economic union negotiates collective trade deals on behalf of all member countries.
- Fiscal Policy: Some economic unions require member countries to coordinate their fiscal policies, which includes decisions regarding taxation, government spending, and budget deficits or surpluses. This means that member countries have less flexibility to tailor fiscal policies to their specific needs.
By giving up some political power, countries in an economic union aim to achieve economic integration and reap the benefits of increased trade, investment, and economic cooperation.