Topic: Customs Union: Definition & Theory
Why Financial Education Is So Important?
Customs Union: Definition & Theory
A customs union is an important step on the path to the global integration of national economies. You'll learn about what a custom union is and some of its key concepts. You'll also have a chance to take a short quiz.
Definition and Theoretical Concepts
A customs union is a political structure entered into between two or more countries to establish a free trade market for member countries and create a common trade policy regarding nonmember countries including establishment of common trade barriers.
A customs union attempts to create a common market for free trade between member countries while using a common strategy regarding trade policy with nonmembers. The member countries can agree to limit imports of some goods and services by use of a trade quota. A member country may want this limited protection to help its infant industries, for example.
Today, many consumers have little understanding of finances. In fact, a lack of financial understanding may underscore why many Americans struggle with saving and investing.
Every few years, the Financial Industry Regulatory Authority (FINRA) issues a short financial literacy test as part of its National Financial Capability Study. The test measures consumers’ knowledge about interest, compounding, inflation, diversification, and bond prices. Generally speaking, the study found that performance on the test correlated with key indicators of financial capability. On the most recent test, just over a third of respondents got four or more questions out of five correct, suggesting widespread financial illiteracy.
Some changes in consumer habits and financial products have made it harder for Americans to manage their finances. In the past, most people used cash for daily purchases. Today, they use credit cards more frequently. In 2019, credit use accounted for 27% of payments, up from 24% in 201.
The way we shop has also changed. Online shopping is now the top choice for many, which can make it easy to use and overextend credit, an all-too-convenient way to accumulate debt quickly.
Meanwhile, credit card companies, banks, and other financial institutions are inundating consumers with credit opportunities—the ability to apply for credit cards or pay off one card with another. Without the proper knowledge, it is easy to get into financial trouble.
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