Some economists hypothesize that international trade has altered the relative demand for skilled and unskilled labors, 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 United States, so the United States 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 United States 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 suggests that international trade affects the demand for labor by skill level, with countries exporting goods that utilize their abundant labor type and importing goods that require the labor type they lack. In this context, the United States, having a relative abundance of skilled labor, exports goods requiring skilled labor and imports goods requiring unskilled labor, which is more plentiful and cheaper in many foreign countries.

Some Economists Hypothesize That International Trade Has Altered the Relative