Assume That Corn and Cloth Are Each Produced Using Both

question 23

True/False

Assume that corn and cloth are each produced using both land and labor in a country. Corn is relatively land-intensive. If the country experiences an increase in its endowment of labor, product prices remaining unchanged, the Rybczynski theorem will predict that the production of corn will decline.

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Definitions:

Interest Rates

The percentage of a loan that is charged to the borrower as interest, usually presented as an annual rate of the remaining loan balance.

Excess Reserves

Banks' reserves that are greater than the minimum regulatory requirement, not needed to fulfill lending demands.

Reserve Requirement

The reserve requirement is a central bank regulation that sets the minimum amount of reserves that must be held by a commercial bank.

Lend Out

The act of providing money or resources to another party with the expectation that the money or resources will be returned, often with interest.