Suppose that FDI has "spillover" benefits for the recipient nation (such as spurring technological innovation, more FDI, or growth in labor productivity). These spillover effects might help explain why:
a. in Singapore, wages fell in the short run.
b. in Singapore, wages fell and returns to capital rose in the long run.
c. in Singapore, wages rose and, depending on the calculation used, returns to capital were close to original levels in the long run, which contradicted the HO model.
d. in Singapore, absolutely nothing changed in either the short or the long run.
Ans: c. in Singapore, wages rose and, depending on the calculation used, returns to capital were close to original levels in the long run, which contradicted the HO model.
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to
a. increase. b. remain unchanged. c. decrease by less than 20 percent. d. decrease by more than 20 percent.
An example of an implicit cost is:
A. the value of a spare bedroom turned into a home office. B. wages paid to a family member who works at the firm. C. operating costs of a company-owned car. D. interest paid on a bank loan used to purchases equipment.
today the futures price for corn for december delivery in chicago is $3.30/bu and yesterday it was $3.40/bu. today the local cash price is $3.05/bu/ today, the local basis is:
a) $0.35/bu b) -$.035/bu c) $0.25/bu d) -$0.25/bu e) not enough information is provided