Which of the following is a characteristic of a common market?

• A. A single currency used by all member countries
• B. No trade agreements between member countries
• C. Free movement of goods and services among member countries
• D. Free movement of labor and capital among member countries

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of a common market in microeconomics and international economics. A common market is a type of trade bloc composed of a free trade area with a customs union, and it additionally allows for the free movement of factors of production such as labor and capital among member countries.
2. Step 2: Identify the key characteristics of a common market. These typically include: free movement of goods and services, free movement of labor, free movement of capital, and a common external tariff on imports from non-member countries.
3. Step 3: Analyze each option given in the problem: 'A single currency used by all member countries' is a feature of an economic and monetary union, not necessarily a common market; 'No trade agreements between member countries' contradicts the idea of a common market, which requires trade agreements; 'Free movement of goods and services among member countries' is a core characteristic of a common market; 'Free movement of labor and capital among member countries' is also a defining feature of a common market.
4. Step 4: Conclude that the correct characteristics of a common market include both the free movement of goods and services and the free movement of labor and capital among member countries.
5. Step 5: Remember that while a common market facilitates these freedoms, it does not necessarily require a single currency or the absence of trade agreements.