The effect of trade on income distribution
A) can be significant in the sort run.
B) is positive for all segments of an economy.
C) is insignificant in the short run.
D) implies that there are no real gains from trade.
E) refutes the model of comparative advantage.

Question

Quizplus · Accepted Answer

In the short run, trade can significantly impact income distribution. This is because some industries may experience job losses or lower wages while others may benefit from increased demand and higher wages. However, in the long run, as the economy adjusts and resources move to more efficient industries, the benefits of trade tend to be spread more evenly across the economy.

The Effect of Trade on Income Distribution