Solved

Assume Both Labor and Capital Are Completely Mobile,and a Nation

Question 27

Multiple Choice

Assume both labor and capital are completely mobile,and a nation is capital rich/labor scarce.In order to increase welfare,what kind of trade policy should the government adapt?


A) Restrict all trade,because the standard of living will decline and people will be worse off
B) Only restrict trade that will make the real wage fall,and allow trade that will not affect wages
C) Not restrict trade,because the real wage will eventually cycle back to the pre-trade value,eliminating any losses in the standard of living
D) Not restrict trade,because any decline in real wages will be matched with an even larger gain by those who own capital

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents