Which factor of production in the United States is most likely to be made worse off (its factor payment will decrease) because of the North American Free Trade Agreement ?
Correct answer: D. unskilled labor
- A. Capital
- B. land
- C. skilled labor
- D. unskilled labor
Explanation
NAFTA increased competition from relatively labor-abundant Mexico, putting downward pressure on US wages for unskilled labor. Capital and skilled labor were more likely to benefit from expanded trade and production specialization.
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