Question

The passage suggests that if the movement of capital in the world were restricted, which of the following would be likely?

• A. Advanced technology could move more quickly from developed countries to developing countries.
• B. Developed countries could compete more effectively for jobs with developing countries.
• C. A country's average wages could increase without significantly increasing the sophistication of its technology or the value of its currency.
• D. A country's productivity could increase without significantly increasing the value of its currency.
• E. Workers could obtain higher wages by increasing their productivity.

Answer 1

The correct option is D A country's productivity could increase without significantly increasing the value of its currency.

It is given that ‘Furthermore, if wages are not allowed to rise, the value of the country's currency will appreciate’, If the movement of capital is restricted, the productivity can rise without rise in wages. But this is difficult in a world where capital moves fast. Hence option (d) is the answer.