When One Applies the Heckscher-Ohlin Model of Trade to the Issue

question 31

Multiple Choice

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions, one must conclude that North-South trade, such as U.S.-Mexico trade,

• A) must help low-skilled workers on both sides of the border.
• B) is likely to hurt high-skilled workers in the U.S.
• C) is likely to involve higher overall national economic gains that will be greater than any harm done to low-skilled workers in the U.S.
• D) is likely to hurt low-skilled workers in Mexico.
• E) gives no advantage to the workers in either country.

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Definitions:

Cash Dividend

This is a payment made by a company out of its earnings to shareholders, distributed in the form of cash.

Par Common Stock

The nominal or face value assigned to a share of common stock in the company’s charter.

Cumulative Preferred Stock

Stock that has a right to receive regular dividends that were not declared (paid) in prior years.

Par Value

The nominal or face value assigned to a share of stock or bond, typically used in accounting as a base value rather than market value.