Textbook Examples of Trade Between Two Nations Are Simplified in Order

question 61

Multiple Choice

Textbook examples of trade between two nations are simplified in order to show how two nations both benefit from trade.These examples are misleading because

• A)in the real world,rich countries can take advantage of poor countries.
• B)they do not account for the reduction in wages that occurs in both countries as a result of trade.
• C)some individuals in both countries may be made worse off because of trade.
• D)trade restrictions are likely to be imposed as trade grows over time.

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Definitions:

Negative Income Tax

Cash payments by the government to the poor—an income tax in reverse. The cash payments decrease as income levels increase.

Unemployment Rate

The percentage of the labor force that is jobless and actively looking for employment.

Poverty Rate

The percentage of the population that lives below the national poverty line, reflecting the portion of the community considered to be living in financial hardship.

Charles Murray

An American political scientist and author known for his works on intelligence and social policy.