Assume a two-country, two-commodity, two-input model where the following relationships hold:(K/L)U.S. > (K/L)ROW(K/L)automobiles > (K/L)shoes (K/L)U.S. is the capital-labor ratio in the United States, (K/L)ROW is the capital-labor ratio in the Rest of the World, (K/L)automobiles indicates the capital-labor ratio in the production of automobiles, and (K/L)shoes indicates the capital-labor ratio in the production of shoes.Assume further that technology and tastes are the same in the United States and the Rest of the World. If trade opens up between the United States and the Rest of the World, according to the Heckscher-Ohlin model, the Rest of the World will export ________ and import
A. shoes; automobiles.
B. automobiles; shoes.
C. neither good; both goods.
D. both the goods; neither good.
Answer: A
You might also like to view...
The reforms introduced by Congress in the 1930s led to:
A. the Great Crash. B. relative financial stability for over 70 years. C. a further decline that lasted for 25 years. D. the Great Depression to be worse than it needed to be.
The theory of consumer choice is based on the hypothesis that each consumer wants to
a. maximize her total utility. b. maximize her marginal utility. c. minimize the rate at which her marginal utility diminishes. d. minimize the percentage of her consumption diverted to inferior goods.
Under a flexible exchange rate system a decline in the value of a currency relative to other currencies is a called a(n) ________ and under a fixed exchange rate system a decrease in the official value of a currency is called a(n) ________.
A. revaluation; appreciation B. depreciation; devaluation C. depreciation; appreciation D. appreciation; revaluation
If a manager adopted both project A and project B simultaneously, the variance in returns associated with this joint project would be:ProjectBoom (25%)Recession (75%)A$30-$15B-$15$20
A. 500. B. 18.75. C. 30. D. 75.