In the Specific Factors Model,which of the Following Will Increase

question 51

Multiple Choice

In the specific factors model,which of the following will increase the quantity of labor used in food production?

• A) an increase in the price of food relative to that of cloth
• B) an increase in the price of cloth relative to that of food
• C) a decrease in the price of labor
• D) an equal percentage decrease in the price of food and cloth
• E) an equal percentage increase in the price of food and cloth

---

Definitions:

Exchange Rates

The value of one currency for the purpose of conversion to another, impacting international trade and investment.

Absolute Purchasing Power Parity

A hypothesis positing that when there are no transportation or transaction expenses, the same products in various nations ought to be priced equally if priced in the same currency.

Exchange Rate

The worth of one currency in relation to another for conversion purposes, specifying the amount of one currency that can be exchanged for another.