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.

Understand how wealth accumulation relates to position improvement in a caste system.

Grasp the ideological foundations of capitalism regarding equality of opportunity.

Identify structural factors influencing unemployment and poverty beyond individual blame.

Evaluate evidence regarding the influence of individual attributes versus social structures on social inequality.

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Definitions:

Marginal Propensity to Consume

The ratio of change in consumption to the change in disposable income, indicating how much income will be spent rather than saved.

Investment

Investment involves allocating resources, such as capital or time, in the expectation of generating a profit or benefit in the future.

Interest Rates

A charge, calculated as a percentage of the principal, demanded by a lender from a borrower for assets' usage.

Disposable Income

Income that remains for saving or spending after direct taxes (such as income tax) have been deducted from an individual's earnings.