ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Its a negative side effect of trade policies
|
|
|
Its a consequence of international trade that forces some people to change jobs from less competitive industries to more competitive ones in the country
|
|
|
Its a policy of companies to change their sites to lower income nations.
|
|
|
None of the above
|
Detailed explanation-1: -First, if consumers are paying higher prices to the protected industry, they inevitably have less money to spend on goods from other industries, and so jobs are lost in those other industries.
Detailed explanation-2: -International trade affects the prices of consumer goods that are produced and sold in the domestic market, which leads to changes in the wages received by individuals.
Detailed explanation-3: -As international trade increases, it contributes to a shift in jobs away from industries where that economy does not have a comparative advantage and toward industries where it does have a comparative advantage.
Detailed explanation-4: -If a country has a comparative advantage in sectors that have high labour market frictions, then trade liberalization reallocates resources towards sectors with stronger labour market frictions, and therefore increase unemployment.