You are the president of Islandia, a small island nation that enjoys a comparative advantage in tourism. Trade representatives from the United States, which enjoys a comparative advantage in manufactured goods, have proposed a free trade agreement between the two countries. Manufacturing workers have opposed the agreement, arguing that Islandia should maintain its steep tariff on American manufactured goods. In an election, the union representing these workers has enough votes to prevail over the union representing tourism workers.

If you are determined to keep your job, how should you respond to the American proposal?

a)You should reject the trade agreement.

b)You should accept the trade agreement.

Answer rating: 100% (QA)

ANSWER I Option a You should reject the trade agreement is correct iIslandia is a small ... View the full answer