Which of the Following Statements Best Indicates Samuelson's Criticism of Free

question 98

Multiple Choice

Which of the following statements best indicates Samuelson's criticism of free trade?

• A) Dynamic gains lead to a universally beneficial outcome for all countries.
• B) Offshoring service jobs that were traditionally mobile will increase the market clearing wage rate.
• C) Free trade has historically been beneficial only to third world countries.
• D) By importing cheap goods from a poor country a rich country may not be able to produce a net gain if the dynamic effect of free trade is to lower real wage rates in the rich country.
• E) Trade changes a country's stock of resources and the efficiency with which it utilizes those resources.

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Definitions:

M2 Money Supply

A measure of the money supply that includes cash, checking deposits, and easily convertible near money, such as savings deposits and money market securities.

Required Reserve Ratio

The fraction of depositors' balances that banks must have on hand as cash, determined by the central bank to ensure the bank's liquidity and stability.

Federal Funds Rate

The interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight.

Inflation Rate

The percentage change in the price level of goods and services in an economy over a given period of time.