According to the theory of trade, if two countries trade witheach other:
A)consumption in one country will fall and wages will also fall.
B)wage costs will remain low if both countries specialize in producing the goods for which they have a comparative
Advantage.
C)trade raises the labor productivity and wages of both countries.
D)wages in the country with a comparative advantage will rise and wages in the country without a comparative advantage will
Fall.

Question

Quizplus · Accepted Answer

According to the theory of trade, trade raises the labor productivity and wages of both countries. This is because trade allows countries to specialize in producing goods where they have a comparative advantage, leading to more efficient production and higher productivity. As productivity increases, wages tend to rise as well. Therefore, option C is the correct answer. Options A, B, and D are incorrect.

According to the Theory of Trade, If Two Countries Trade