If there are large disparities in wage levels between countries, then what would be the effect of trade?
A) trade is likely to be harmful to the country with low wages.
B) trade is likely to have no effect on either country.
C) trade is likely to be harmful to the country with high wages.
D) trade is likely to be harmful to both countries.
E) trade is likely to be harmful to neither country
A) trade is likely to be harmful to the country with low wages.
B) trade is likely to have no effect on either country.
C) trade is likely to be harmful to the country with high wages.
D) trade is likely to be harmful to both countries.
E) trade is likely to be harmful to neither country
Related textbook solutions
Related questions
"Assume that Country A and Country B use different floating currencies and trade exclusively with one another. There is a revaluation (appreciation) of Country A's currency against Country B's currency. Assume that just prior to the revaluation, Country A and Country B have a perfect balance of trade, where each country imports the exact same value of goods and services from the other. Holding all else constant, what is the most likely impact of the revaluation of Country A's currency on the balance of trade between the two countries?"
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Country A will develop a trade surplus while Country B will develop a trade deficit. |
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Country B will develop a trade surplus while Country A will develop a trade deficit. |
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Country A will develop a trade surplus in the short term while Country B will develop a trade surplus in the long term. |
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Because a simple change to the value of a currency is not likely to affect the balance of trade between two countries, the two countries will keep a perfect balance of trade. |
