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Chapter 20: Q. 25 (page 490)

How is international trade, taken as a whole, likely to affect the average level of wages?

Short Answer

Expert verified

Increases.

Step by step solution

01

Step1. Introduction

International trade is the exchange of goods and services across the global/international borders. It refers to the free trade across countries.

It accumulates trade wealth and gains, further enhancing the production due to capital accumulation. All of it induces production as a whole, thereby increasing the number of jobs and demand for labor.

02

Step2. Explanation

As the production demand increases, it shall create demand for labor, thereby creating job opportunities.

When the demand for labor rises, and the supply more or less being the same, the wage rate shall go up.

Hence, international trade increases the average wage rates.

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