Question

2.5 importance of international trade
economics (updbaf) #100519 / unit 2: market structures and trade

1. according to the text, how does international trade affect real wage levels in an economy?

it significantly increases real wages in all sectors
it decreases real wages due to foreign competition
it has no effect on real wage levels
it only affects wages in export - oriented industries

Explanation:

In reality, the impact of international trade on real - wage levels is complex. It doesn't uniformly increase real wages in all sectors as different industries are affected differently. Foreign competition can put downward pressure on wages in some sectors but also create opportunities for wage increases in others. It doesn't have no effect, and it affects more than just export - oriented industries. Overall, it can decrease real wages in some sectors due to foreign competition.

Answer:

It decreases real wages due to foreign competition