Between 1980 and 2014, income inequality in the United States has increased in part due to expanding international trade. How does expanding international trade contribute to income inequality?
A) It reduces the cost of producing goods and therefore lowers the value of labor's services.
B) It allows producers to exploit workers and reduce the wages they are willing to pay workers.
C) It increases the demand for a wide array of products which in turn increases prices beyond the reach of average-income individuals.
D) Domestic firms can now hire low-skilled workers anywhere in the world, putting U.S. workers in competition with foreign workers. This has caused the wages of unskilled workers to be depressed relative to the wages of other workers.
Question 2
Refer to Figure 21-6. The market is in equilibrium. If the government budget deficit rises, which of the following would you expect to see?
A) The quantity of loanable funds demanded by firms will fall below 120 million.
B) The interest rate will fall below 4 percent.
C) The quantity of loanable funds demanded by firms will rise above 120 million.
D) The budget deficit will have no impact on the quantity of loanable funds demanded by firms.
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