In the Krugman Model, When a Country Is Opened to International

question 14

Multiple Choice

In the Krugman model, when a country is opened to international trade, the total output of each firm __________ and the real wage of workers in the country __________.

• A) increases; decreases
• B) increases; also increases
• C) decreases; also decreases
• D) decreases; increases

---

Definitions:

Soviet Union

A former socialist state in eastern Europe and northern Asia, existing from 1922 to 1991.

Invisible Hand

A term coined by Adam Smith to describe the self-regulating behavior of the marketplace, where individual self-interests inadvertently contribute to the economy's overall health.

Childcare Center

A facility that provides care and education to young children during the working hours, facilitating parental employment.

Profitable

Describing a business or activity that generates more revenue than it costs to operate, resulting in a financial gain.