RJ Djokovic is studying for the 2008 Level 2 examination and creates a flashcard on the reasons for trade restrictions. The card reads as follows: Arguments that Economists Support Protect Developing Industries Anti-Dumping National Defense Arguments They Don’t Wage-Depression in High-Wage Countries Job Creation Job Protection Djokovic also makes the following notes: 1. The argument “against” wage depression in high-wage countries is related to the law of comparative advantage and that a high hourly wage may not lead to high per-unit labor costs. 2. Economists do not support the job creation argument because it does not hold in the short run. Are Djokovic’s notes to the flashcard correct? A. Yes. B. No, because the job creation argument may hold in the short run. C. No, because a high hourly wage leads to high per-unit labor costs. D. No, because the wage depression argument is not related to the law of comparative advantage.
Both sound right to me, A as well.
It is “a”, but the support is only weak. “b” are often cited reasons, but the support for them is flawed.
Doesn’t job creation hold in the short run but does not in the long run?
And doesn’t job protection hold in the short run but not in the long run?
ozzy…you are right…answer is B, because job creation argument may hold up in the short run.
what a POS question one little word “short” instead of “long”. economist still don’t support it but the question has it for the wrong reason
it’s pretty clear in the text that those concerns are valid in the short run, but not in the long run (which is obviously what matters more).