If We Consider the Two-Sector (Manufacturing and Agriculture) Specific-Factors Model

question 36

Multiple Choice

If we consider the two-sector (manufacturing and agriculture) specific-factors model, the effect of an increase in exports on the real wages of workers:

• A) is inconclusive because some goods' prices will be higher compared with the wage, and some will be lower.
• B) absolutely increases the buying power of the real wage.
• C) absolutely decreases the buying power of the real wage.
• D) will encourage foreign workers to emigrate to the United States.