Which of the following statements describes what the Ricardian model predicts as a nation improves its technology and productivity?
A) Its standard of living will rise.
B) Wages of its workers will fall.
C) It will lose its absolute advantage.
D) It will lose its comparative advantage.

Question

Quizplus · Accepted Answer

According to the Ricardian model, as a nation improves its technology and productivity, it will be able to produce more goods and services in the same amount of time or with the same amount of resources. This will lead to an increase in its gross domestic product (GDP) and per capita income, and consequently, an increase in its standard of living. The other choices are not consistent with the predictions of the Ricardian model.

Which of the Following Statements Describes What the Ricardian Model