Feenstra and Taylor describe the "magnification effect" of trade. This effect describes how:
a. workers tend to complain more about trade than is justified.
b. owners of capital can "magnify" their earnings if they are able to trade.
c. small changes in relative prices as a result of trade lead to larger longrun changes in the real wage or rental of factors.
d. unemployment is a big problem among workers but not capital because workers have to move when they are laid off.
Answer: c. small changes in relative prices as a result of trade lead to larger longrun changes in the real wage or rental of factors.
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