The Balassa-Samuelson Model Says That Wages and Prices in General

question 19

Multiple Choice

The Balassa-Samuelson model says that wages and prices in general are higher in higher-income nations because:

• A) they have more effective laws protecting their workers.
• B) the workers have a higher productivity level, which is reflected in prices of nontraded goods.
• C) there is less competition in these economies.
• D) taxes on business and for entitlement programs raise labor and other costs, making prices much higher.

---

Definitions:

Units Sold

The total number of a product that a company sells within a specific time period, often used to measure sales performance.

Periodic LIFO

Periodic LIFO (Last-In, First-Out) is an inventory valuation method used in accounting that assumes the most recently purchased items are sold first, and ending inventory costs are determined at the end of the accounting period.

Ending Inventory

The total value of all inventory a company has in its possession at the end of a reporting period, vital for calculating cost of goods sold.

Cost Flow Assumption

An accounting method used to value inventory and determine the cost of goods sold, based on the assumed flow of goods.