The Heckscher­Ohlin Model Simplifies the Analysis by

question 35

Multiple Choice

The Heckscher­Ohlin model simplifies the analysis by
Assuming:

• A)there is unemployment of workers in the home country.
• B)there are a variety of levels of workers and types of capital.
• C)land is an important factor of production.
• D)there are only two nations, with two goods and two factors of production.

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Definitions:

Futures Contract

A standardized legal agreement to buy or sell a specific commodity or financial instrument at a predetermined price at a specified time in the future.

Zero Coupon Interest Rate

An interest rate that applies to a bond or loan that does not pay periodic interest, only paying the face value at maturity.

Arbitrage Profit

The profit realized from exploiting the price difference of the same or similar financial instruments on different markets or in different forms.

Stock Index

A statistical measure which tracks the performance of a basket of stocks, representing a segment of the stock market.