Which of the following is a consequence of the implementation of the North American Free Trade Agreement?
A) Low-skilled jobs will be moved out to Mexico resulting in lowering of average wage rates in U.S. and Canada.
B) Increased imports from Mexico will help reduce the huge trade deficit for United States and Canada.
C) Lower incomes of the Mexicans would allow them to import less U.S. and Canadian goods, thereby decreasing demand.
D) A large number of Mexican firms will hire low-skilled workers from the United States.
E) Some U.S. and Canadian firms would move production to Mexico to take advantage of lower labor costs.

Question

Quizplus · Accepted Answer

The implementation of NAFTA led to increased competitiveness for companies in Mexico, which prompted some U.S. and Canadian firms to move production to Mexico to take advantage of the lower labor costs. As a result, some low-skilled jobs were moved out of the U.S. and Canada, leading to a potential lowering of average wage rates in these countries. However, this result is not as significant as option A implies. Option B is incorrect because NAFTA did not have a significant impact on the trade deficit of the United States and Canada. Option C is not a direct consequence of NAFTA. Option D is also incorrect, as there is no evidence to suggest that Mexican firms would hire low-skilled workers from the United States as a result of NAFTA.

Which of the Following Is a Consequence of the Implementation