Which of the following BEST describes the shortrun effects of FDI inflows to Singapore during the latter part of the twentieth century?
a. The effects contradicted the specificfactors model because wages fell, while the rental on capital rose.
b. The effects confirmed the specificfactors model because wages rose, while the rental on capital fell.
c. FDI did not have any measurable effects on either wages or the rental on capital in Singapore.
d. FDI confounded economists because both the rental on capital rose and wages rose in Singapore.
Answer: b. The effects confirmed the specificfactors model because wages rose, while the rental on capital fell.
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