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Increase aggregate unemployment levels

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Reference no: EM131373062

For each question, answer T/F/U and briefly explain the answer in your own words

1. In the Ricardian model, two countries can gain from trade with each other even if their relative prices in autarky are the same.

2. In the case of U.S. textiles, the United States should not import textiles from Asian nations since it has absolute advantage in production.

3. In the real world, there is no support for the Ricardian model of trade: the prediction that wages are determined by labor productivities does not hold in the data.

4. In the Ricardian model, trade with a low wage country will increase aggregate unemployment levels.

5. Wages in the US are $15/hour while wages inChina are $3/hour. Goods manufactured using only labor will be 5 times cheaper in China.

Reference no: EM131373062

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