One of the Predictions of the HO Model Is That

question 39

Multiple Choice

One of the predictions of the HO model is that

• A)countries with different factor endowments but similar technologies and preferences will have a strong basis for trade with each other.
• B)countries will tend to specialize, but not completely, in their comparative advantage good.
• C)reciprocal demand leads to an equilibrium terms of trade by inducing changes in both demand and supply.
• D)All of the above.

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