Question

What is an unintended consequence of multinational corporations searching for cheap labor?

Boom and bust cycles are initiated.
The corporations pay higher taxes.
The price of farmland increases.
The elites use their payoffs to stay in power.

Answer 1

An unintended consequence of multinational corporations searching for cheap labor is the elites use their payoffs to stay in power.

Answer 2

The correct answer is: "The elites use their payoffs to stay in power."

Firms constantly seek to hire as cheap as possible. The less amount they pay in terms of salaries, the greater will be the margin of profits, as the calculation will be profit= revenue - costs, being salaries one fraction of the costs.

This mechanism produces an increase of the inequality gap. Workers get lower salaries and firmowners and directives keep on rising the amount of profits generated by their businesses, and in turn, their payoffs also grow. This trend creates elites.