Let us define the real wage as the purchasing power of one hour of labor. In the Ricardian 2X2 model, if two countries under autarky engage in trade then
A) the real wage will not be affected since this is a financial variable.
B) the real wage will increase only if a country attains full specialization.
C) the real wage will increase in one country only if it decreases in the other.
D) the real wage will rise in both countries.
E) the real wage will fall under pressure of international competition.
D
You might also like to view...
Suppose the quantity of x is measured on the horizontal axis. If the price consumption curve is vertical when the price of x changes, then the demand for x is
A) perfectly elastic. B) perfectly inelastic. C) unit elastic. D) There is not enough information to determine the price elasticity of demand for x.
The aggregate demand curve will shift rightward when there is:
a. a decrease in government spending. b. a decrease in incomes abroad. c. a tax increase. d. the expectation that future consumer income will rise.
Why do decision makers tend to ignore external costs? How can internalizing external costs move us closer to efficient levels of output?
Which of the following supply-side efforts was embraced by the second Bush administration in 2001?
A. Reduction in marginal tax rates. B. Reduction of the deficit. C. Reduction in spending on infrastructure. D. Increase in government environmental regulations.