In the Diagram in Question #9 Above, If Restrictions on Capital

question 27

Multiple Choice

In the diagram in Question #9 above, if restrictions on capital flows were removed and Capital was allowed to flow from the low-return country to the high-return country, then National income (i.e., GNP) in country I would __________ by the amount of area__________.

• A) decrease; K₂EFK₁
• B) decrease; K₂EGK₁
• C) increase; AEF
• D) increase; EFG

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