4. The effect of trade on income distribution A) is insignicant in the short run B) is positive for all segments of an economy C) can be signicant in the short run D) implies that there are no real gains from trade E) refutes the model of comparative advantage 5. Engaging in free trade usually leads to a process of production specialisation within country that causes winners and losers. Governments A) Should ignore the losers and focus on the winners B) Should design and implement policies to compensate the losers and facilitate their transition to another sector/activity C) Should avoid opening to free trade when the losers (or potential losers) have strong lobby power or have representatives in the government D) Should rely on the good will and initiative of the winners to compensate the losers