What are the short-run economic effects when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?

Question

Quizplus · Accepted Answer

When U.S. firms substitute labor outside of the U.S. for labor inside the U.S., the short-run economic effects include a decrease in the wage rate in the U.S. due to decreased demand for labor and an increase in the supply of labor. However, the wage rate in the foreign country will increase due to increased demand for labor and a decrease in the supply of labor. Therefore, the correct answer is D, as it best reflects this impact on the wage rates in both countries.

What Are the Short-Run Economic Effects When U