The lowering of barriers to trade and investment among countries has led to ________ throughout the EU.

Question

BlackTom AI · Accepted Answer

The question asks about the effect of lowering barriers to trade and investment among countries within the EU. 
Option 1: higher costs of borrowing. While financial integration can help reduce some borrowing costs, the main consequence of lowering trade and investment barriers is not inherently higher borrowing costs; in fact, capital mobility tends to reduce such costs, so this option is unlikely.
Option 2: increase in prices. Lower barriers typically increase competition and efficiency, which tends to push prices down or stabilize them rather than cause a general increase. Therefore this choice misstates the common outcome of market integration.
Option 3: increase in hedging costs. Financial integration can reduce hedging needs for cross-border trades and may even reduce hedging complexity and costs, not increase them, so this option is not consistent with the typical effect of barrier reduction.
Option 4: increased price competition. With fewer barriers, firms face more competition from producers in other countries, leading to more aggressive pricing, better efficiency, and lower markups. This aligns with the well-established economic intuition that deeper integration enhances price competition across markets.
In light of these assessments, the most accurate consequence among the options is that lowering barriers leads to increased price competition, reflecting the enhanced competition and efficiency in a more open internal market.

The lowering of barriers to trade and investment among countries has led to ________ throughout the EU.

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