International trade tends to lower the amount of national income received by the scarce factor of production.

Question

Quizplus · Accepted Answer

According to the Stolper-Samuelson theorem, international trade tends to lower the real income of the scarce factor of production in a country because it increases the relative price of the good that uses the abundant factor intensively, benefiting the abundant factor at the expense of the scarce factor.

International Trade Tends to Lower the Amount of National Income