Question

1. What is the purpose of the International Monetary Fund? and the Word Bank? Provide some explanation of their practices.

2. What are the 5 levels of regional trade agreements? How do they differ from each other?

3- What are the public goods provided by international institutions?

Answer 1

Answer part a)The World Bank Group works with developing countries to reduce poverty and increase shared prosperity, while the International Monetary Fund serves to stabilize the international monetary system and acts as a monitor of the world’s currencies. The World Bank Group provides financing, policy advice, and technical assistance to governments, and also focuses on strengthening the private sector in developing countries. The IMF keeps track of the economy globally and in member countries, lends to countries with balance of payments difficulties, and gives practical help to members.

Answer part b). Preferential Trade Areas

The preferential trading agreement requires the lowest level of commitment to reducing trade barriers, though member countries do not eliminate the barriers among themselves. Also, preferential trade areas do not share common external trade barriers.

2. Free Trade Area

In a free trade agreement, all trade barriers among members are eliminated, which means that they can freely move goods and services among themselves. When it comes to dealing with non-members, the trade policies of each member still take effect.

3. Customs Union

Member countries of a customs union remove trade barriers among themselves and adopt common external trade barriers.

4. Common Market

A common market is a type of trading agreement wherein members remove internal trade barriers, adopt common policies when it comes to dealing with non-members, and allow members to move resources among themselves freely.

5. Economic Union

An economic union is a trading agreement wherein members eliminate trade barriers among themselves, adopt common external barriers, allow free import and export of resources, adopt a set of economic policies, and use one currencies.