When a Rich Nation Buys a Product Made in a Poor

question 86

Multiple Choice

When a rich nation buys a product made in a poor nation, in the poor nation the demand for labor ________ and the wage rate ________.

• A) increases; rises
• B) increases; falls
• C) decreases; rises
• D) decreases; falls

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Definitions:

Warranty

A guarantee, typically from a manufacturer or seller, promising to repair or replace defective goods within a specified time period.

Lease Liability

A financial obligation representing the present value of future lease payments that a lessee is required to make under a lease agreement.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to present value future cash flows, or in the context of bond investments, it is the interest rate used by investors to compare different bond issues.

Capital Lease

A lease considered as a purchase of an asset, where the lessee records the leased asset as if it were owned.