Which of the following statements is true about international trade?
A) In the long-run, trade not only reduces employment in some sectors but also reduces employment in the economy as a whole.
B) In the short-run, trade can reduce employment in some sectors and also in the economy as a whole.
C) Owners of factors of production used in industries in which a nation lacks a comparative advantage are more likely to gain from trade than those owners of resources used in industries in which a country has a comparative advantage.
D) Countries with relatively higher wage rates are more likely to be hurt by international trade.

Question

Quizplus · Accepted Answer

In the short-run, trade can have negative effects on certain industries and result in unemployment, as some workers may lose their jobs due to competition from cheaper imports. However, in the long-run, trade can lead to overall economic growth and job creation as comparative advantages are exploited and resources are allocated more efficiently. Option A is incorrect as it only applies to the short-run, and in the long-run, trade can create jobs. Option C is incorrect as owners of resources used in industries with a comparative advantage are likely to benefit from trade. Option D is also incorrect as countries with higher wage rates may have a comparative advantage in other sectors and benefit from trade.

Which of the Following Statements Is True About International Trade