As a result of outsourcing,
A)Domestic workers may become more productive.
B)Profits decrease for domestic companies.
C)GDP definitely decreases.
D)Unemployment must increase in the long run.

Question

Quizplus · Accepted Answer

Outsourcing can increase productivity by allowing domestic firms to specialize in areas where they have a comparative advantage, while outsourcing the rest. This can lead to greater efficiency and therefore increased productivity. While outsourcing can lead to job losses in the short-term, in the long-term increased productivity can lead to job creation as companies grow and the economy expands. Therefore, it is not necessarily true that outsourcing leads to increased unemployment in the long run. It is also not necessarily true that profits will decrease for domestic firms, as outsourcing can lead to cost savings and increased competitiveness. GDP may also not necessarily decrease, as increased productivity can lead to increased economic growth.

As a Result of Outsourcing