If Unskilled Labor Is Relatively Plentiful and Cheap in Many

question 115

Multiple Choice

If unskilled labor is relatively plentiful and cheap in many foreign countries, then as the United States expands its trade with these foreign countries, the domestic demand for

• A) unskilled labor will rise and skilled labor will fall.
• B) skilled labor will rise and unskilled labor will fall.
• C) both skilled and unskilled labor will rise proportionately.
• D) both skilled and unskilled labor will be unaffected, assuming no barriers to free trade.

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Definitions:

National Saving

The total amount saved by a country's economy, calculated as the sum of private and public savings, often representing the difference between national income and consumption.

Closed Economy

An economic system that does not interact with other economies in terms of trade, investment, or migration.

Closed Economy

An economic system that does not engage in international trade with outside countries and relies wholly on its own resources.

Loanable Funds

The funds available for borrowing in the financial markets, consisting of savings and sometimes bank loans that are available to be lent to businesses and individuals.