Question: What will happen to a worker's nominal wage and real wage when trade causes Home country's relative price of manufactures to go up? Explain using

What will happen to a worker's nominal wage and real wage when trade causes Home country's relative price of manufactures to go up? Explain using the case where PM increases and PA stays unchanged after trade compared to autarky. What will happen to a capital owner's nominal rental and real rental when trade causes Home country's relative price of manufactures to go up? Explain using the case where PM increases and PA stays unchanged after trade compared to no trade.

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When nations move to free trade they will encounter an expansion in total productivity The adjustment in prices will cause a move underway of the two ... View full answer

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