The following is a list of statements relating to the impact of free trade on wa
ID: 1222356 • Letter: T
Question
The following is a list of statements relating to the impact of free trade on wages and employment. Indicate whether the statement is true or false by dragging and dropping the appropriate term into the boxes provided:
A trade agreement reducing trade barriers between the US and a low-income/low-wage economy would lead to an increase in the unemployment rates in the US.
Free trade does not generally benefit those employed in high-skill, high wage jobs.
Free trade generally increases the wage rates and productivity across an economy.
A trade agreement reducing trade barriers between the US and a low-income/low-wage economy would reduce employment in low wage service industry jobs in the US.
The following is a list of statements relating to the impact of free trade on wages and employment. Indicate whether the statement is true or false by dragging and dropping the appropriate term into the boxes provided. A trade agreement reducing trade barriers between the US and a low-income/low- wage economy would lead to an increase in the unemployment rates in the US Free trade does not generally benefit those employed in high-skill, high wage jobs. Free trade generally increases the wage rates and productivity across an economy. A trade agreement reducing trade barriers between the US and a low-income/low- wage economy would reduce employment in low wage service industry jobs in the US FalseTrueExplanation / Answer
1. A trade agreement reducing trade barriers between the US and a low-income/low-wage economy would lead to an increase in the unemployment rates in the US.
FALSE, Free trade simply means that countries can import and export without much duties to be paid. If there is free trade, then for some of the Goods and services which are lesser in price and can be afforded by low income economy population, demand will be higher in US meaning more and more production, thus more person needed in employment. However some goods which can be bought from such contries and not produced, will also result in reduction in production of such goods. However with free trade exports of US to such countries are higher than compared to the imports.
Free trade does not generally benefit those employed in high-skill, high wage jobs.
False, take an example, Suppose India(a low income level country as compared to US), imports technology products from India. So the production of such products like Hard disks, or computer parts etc. will take place in India. Those in higher position in India, in production departments, will be benefited by such exports from India, as it means higher revenue to the company. Thus free trade affects all the employees whether with high-skill or low skill, the difference being that the magnitude is different.
Free trade generally increases the wage rates and productivity across an economy.
True, Free trade means that goods and services being produced in the countries where such goods can be produced at low cost, as well as there is inflow of capital across countries, as a result productivity is increased. Not only that wage rates are also increased as a result of higher benefits to the economy.
A trade agreement reducing trade barriers between the US and a low-income/low-wage economy would reduce employment in low wage service industry jobs in the US.
False, Normally US will have better technology to produce the products in low wage service industry which would mean that countries with low income will be importing from US. Thus as a result there shall be an increase in the employment in low wage service industry. This argument is totally based on the efficiency in the production process.
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