Some economists hypothesize that international trade has altered the relative demand for skilled and unskilled labor, changing the gap in earnings between these two groups. Which of the following statements best describes this hypothesis?
A)Unskilled labor is plentiful and cheap in the US, so the US tends to export goods produced with unskilled labor and import goods produced with skilled labor.
B)Unskilled labor is plentiful and cheap in many foreign countries, so the US tends to import goods produced with unskilled labor and export goods produced with skilled labor.
C)Computers raise the demand for skilled workers and reduce the demand for the unskilled workers whose jobs are replaced by the computers.
D)Greater demand for skilled labor has led to higher wages for those workers and greater demand for imported products.

Question

Quizplus · Accepted Answer

The hypothesis being described is that international trade has led to a greater demand for skilled labor and a decrease in demand for unskilled labor, which has led to a widening gap in earnings between the two groups. Option B best describes this hypothesis by stating that the US tends to import goods produced with unskilled labor and export goods produced with skilled labor, suggesting a shift in demand towards skilled workers. Option A is incorrect because it suggests that the US exports goods produced with unskilled labor, which would imply a greater demand for unskilled labor. Option C mentions computers, which is not directly related to international trade, and option D is incorrect because it suggests that greater demand for imported products has led to higher wages for skilled workers, which is not necessarily true.

Some Economists Hypothesize That International Trade Has Altered the Relative