Problem

1. During the heated discussions in the United States about the North American Free Trade Agreement (NAFTA), many observers stated that adoption of the agreement would lead to a surge of investment from the United States into Mexico because of Mexico's much lower wages. From the standpoint of tariff elimination alone, how might NAFTA reduce the amount of U.S. investment in Mexico?

2. Briefly explain why there is increasing concern about immigration policy in the United States in recent years. What effects might reducing the inflow of migrants, both legal and illegal, have on the economy?