According to the Theory of Trade, If Two Countries Trade

question 106

Multiple Choice

According to the theory of trade, if two countries trade with each other:

• A) consumption in one country will fall and wages in that country will also fall.
• B) wage costs will remain low if both countries specialize in producing the goods for which they have a comparative advantage.
• C) trade raises labor productivity and wages of both countries.
• D) wages in the country with a comparative advantage will rise and wages in the country without a comparative advantage will fall.

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