Feenstra and Taylor describe the "magnification effect" of
Trade.This effect describes how:
A)workers tend to complain more about trade than is justified.
B)owners of capital can "magnify" their earnings if they are able to trade.
C)small changes in relative prices as a result of trade lead to larger longrun changes in the real wage or rental of
Factors.
D)unemployment is a big problem among workers but not capital because workers have to move when they are laid
Off)

Question

Feenstra and Taylor describe the "magnification effect" of
Trade.This effect describes how:
A)workers tend to complain more about trade than is justified.
B)owners of capital can "magnify" their earnings if they are able to trade.
C)small changes in relative prices as a result of trade lead to larger long­run changes in the real wage or rental of
Factors.
D)unemployment is a big problem among workers but not capital because workers have to move when they are laid
Off)

Quizplus · Accepted Answer

The magnification effect of trade describes how small changes in relative prices as a result of trade can lead to larger long-run changes in the real wage or rental of factors. This means that even small changes in trade can have a significant impact on the earnings of workers and owners of capital.

Feenstra and Taylor Describe the "Magnification Effect" of