In the 2-Factor, 2-Good Heckscher-Ohlin Model, the Two Countries Differ

question 37

Multiple Choice

In the 2-factor, 2-good Heckscher-Ohlin model, the two countries differ in

• A) tastes and preferences.
• B) military capabilities.
• C) the size of their economies.
• D) relative abundance of factors of production.
• E) labor productivities.

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Definitions:

Gross Investment

The total amount of money spent on capital projects before deducting depreciation or other allowances for the wearing out of assets.

Government Spending

The total amount of money spent by the government on various sectors including public services, welfare, defense, and infrastructure.

Industry Regulation

The imposition of rules by a government, along with mechanisms for their enforcement, designed to modify behaviors within specific industries.

Reserve Requirement

A regulation set by central banks determining the minimum amount of reserves that must be held by a commercial bank.