If the U.S. trade pattern is as indicated by the Leontief test, this would suggest that participation in trade rather than in autarky by the United States has __________ the real return to U.S. capital and __________ the real wage of U.S. labor.
A) increased; also has increased
B) increased; has decreased
C) decreased; has increased
D) decreased; has decreased

Question

Quizplus · Accepted Answer

The Leontief paradox suggests that the U.S., being capital-abundant, exports labor-intensive goods and imports capital-intensive goods. This implies that trade increases the real wage of U.S. labor and decreases the real return to U.S. capital.

If the US Trade Pattern Is as Indicated by the Leontief Test