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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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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