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Many people believe that because wages are lower in developi

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Many people believe that because wages are lower in developi [#permalink] New post 14 Oct 2010, 16:04
Many people believe that because wages are lower in developing countries than in developed countries, competition from developing countries in goods traded internationally will soon eliminate large numbers of jobs in developed countries. Currently, developed countries' advanced technology results in higher productivity, which accounts for their higher wages. Advanced technology is being transferred ever more speedily across borders, but even with the latest technology, productivity and wages in developing countries will remain lower than in developed countries for many years because developed countries have better infrastructure and better-educated workers. When productivity in a developing country does catch up, experience suggests that wages there will rise. Some individual firms in developing countries have raised their productivity but kept their wages (which are influenced by average productivity in the country's economy) low. However, in a developing country's economy as a whole, productivity improvements in goods traded internationally are likely to cause an increase in wages. Furthermore, if wages are not allowed to rise, the value of the country's currency will appreciate, which (from the developed countries' point of view) is the equivalent of increased wages in the developing country. And although in the past a few countries have deliberately kept their currencies undervalued, that is now much harder to do in a world where capital moves more freely.
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.
[Reveal] Spoiler:
D


2. The primary purpose of the passage is to
A identify the origin of a common misconception
B discuss the implications of a generally accepted principle
C present information relevant in evaluating a commonly held belief
D defend a controversial assertion against a variety of counterarguments
E explain under what circumstances a well-known phenomenon occurs
[Reveal] Spoiler:
C


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Re: Wages in developing countries [#permalink] New post 14 Oct 2010, 20:21
Is the answer E?
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Re: Wages in developing countries [#permalink] New post 15 Oct 2010, 02:56
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Re: Wages in developing countries [#permalink] New post 15 Oct 2010, 11:05
No.
OA is D. But I do not understand why.

I think that we understand better the reading passages than GMAC lol.
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Re: Wages in developing countries [#permalink] New post 15 Oct 2010, 18:36
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metallicafan wrote:
I found this passage in an old post:

Many people believe that because wages are lower in developing countries than in developed countries, competition from developing countries in goods traded internationally will soon eliminate large numbers of jobs in developed countries. Currently, developed countries' advanced technology results in higher productivity, which accounts for their higher wages. Advanced technology is being transferred ever more speedily across borders, but even with the latest technology, productivity and wages in developing countries will remain lower than in developed countries for many years because developed countries have better infrastructure and better-educated workers. When productivity in a developing country does catch up, experience suggests that wages there will rise. Some individual firms in developing countries have raised their productivity but kept their wages (which are influenced by average productivity in the country's economy) low. However, in a developing country's economy as a whole, productivity improvements in goods traded internationally are likely to cause an increase in wages. Furthermore, if wages are not allowed to rise, the value of the country's currency will appreciate, which (from the developed countries' point of view) is the equivalent of increased wages in the developing country. And although in the past a few countries have deliberately kept their currencies undervalued, that is now much harder to do in a world where capital moves more freely.


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.

IMO it is
[Reveal] Spoiler:
E


BUT OA IS



D

Furthermore, if wages are not allowed to rise, the value of the country's currency will appreciate, which (from the developed countries' point of view) is the equivalent of increased wages in the developing country. And although in the past a few countries have deliberately kept their currencies undervalued, that is now much harder to do in a world where capital moves more freely

increased prod => higher wages or (lower wages and) appreciated currency (= dev'd country paying more for the goods)

currency undervalued => currency not appreciated == lower wages BUT AT HIGHER PRODUCTIVITY

D: A country's productivity could increase without significantly increasing the value of its currency
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Re: Wages in developing countries [#permalink] New post 29 Oct 2010, 17:59
D
although in the past a few countries have deliberately kept their currencies undervalued, that is now much harder to do in a world where capital moves more freely.

The last sentence of the passage says that ..Currencies value kept at low BUT it is difficult in where capital moves freely..i.e. author unwilling to accept that currency values can be devalued easily.
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Re: Wages in developing countries [#permalink] New post 30 Mar 2011, 08:40
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And although in the past a few countries have deliberately kept their currencies undervalued, that is now much harder to do in a world where capital moves more freely.

This line suggests that the answer is D.
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Re: Wages in developing countries [#permalink] New post 01 Apr 2011, 13:43
D , without a doubt
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Re: I found this passage in an old post: Many people believe [#permalink] New post 07 Apr 2013, 01:08
IMHO,

The reason why I think D could be right, is because if the capital( which is nothing but investment ) is restricted within one's own country, it could be used to make the businesses within the country to be more productive .

Now when it come to option E, the very fact that workers would obtain high wages is dependant on whether the productivity increase(due to the reinvested capital) is put to good use in the form of exports etc.,, yielding considerable profits.

Please let me know if this reasoning is sound enough to help choose the right answer. Thank you.
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Re: Many people believe that because wages are lower in developi [#permalink] New post 01 Jul 2014, 02:30
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Re: Many people believe that because wages are lower in developi   [#permalink] 01 Jul 2014, 02:30
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