It is argued that if a rich high wage country such as the United ...

[piesebel]

It is argued that if a rich high wage country such as the United States were to expand trade with a relatively poor and low wage country such as Mexico, then U.S. industry would migrate south, and U.S. wages would fall to the level of Mexico's.
 
  What do you think about this argument?

Question 2

Developing countries that concentrate production in agricultural products or raw materials may face a secular decline in their international terms of trade due to
 
  A) sluggish demand for these products in developed countries.
  B) large increases in the supplies of these products on world markets due to export expansion policies.
  C) inelastic demand for these products in developed countries.
  D) All of the above.

[Perkypinki]

Answer to Question 1

The student may think anything. The purpose of the question is to set up a discussion, which will lead to the models in the following chapters.

Answer to Question 2

D