Increased international trade reduces the demand for a country's products that are produced more efficiently abroad (import-competing products). This increase in trade _____ the demand for workers in import-competing industries, and _____ their wages..

Question

Quizplus · Accepted Answer

In industries where a country's foreign competition is strong or more efficient, demand for the country's domestically made products will decrease and thereby decrease the demand for workers in those industries. With decreased demand for labor, we also see a decrease in real wages.

Increased International Trade Reduces the Demand for a Country's Products