In the Heckscher-Ohlin Model, When Two Countries Begin to Trade

question 34

Multiple Choice

In the Heckscher-Ohlin model, when two countries begin to trade with each other

• A) the relative prices of traded goods in the two countries converge.
• B) relative factor prices in the two countries diverge.
• C) benefits from trade are evenly distributed between the two countries.
• D) all factors in both countries will gain from trade.
• E) all factors in one country will gain, but there may be no gains in the other country.

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Definitions:

Securing Adequate Financing

The process of obtaining the necessary funds to start or expand operations, typically through loans, equity investments, or other financial instruments.

Small Businesses

Enterprises characterized by a small number of employees and/or low volume of sales, often defined by local or national standards.

Loans

Financial arrangements in which a lender provides funds to a borrower with the expectation of repayment over time, typically with interest.

Financial Institutions

Organizations that provide financial services to their clients or members, including banks, credit unions, investment companies, and insurance companies.