Why is it unlikely for most countries to reach a state of complete specialization? Answer with reference to what was discussed in Chapter 2. Define the ‘terms of trade’ and illustrate why it is a useful concept to use when studying international trade. An article in the New Yorker states, “the main burden of trade-related job losses and wage declines has fallen on middle- and lower-income Americans. But … the very people who suffer most from free trade are often, paradoxically, among its biggest beneficiaries.” Explain how it is possible that middle- and lower-income Americans are both the biggest losers and at the same time the biggest winners from free trade.
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