Starting from an Autarky (No-Trade)situation with Heckscher-Ohlin Model,if Country H

question 58

Multiple Choice

Starting from an autarky (no-trade) situation with Heckscher-Ohlin model,if Country H is relatively labor abundant,then once trade begins

• A) wages should rise and rents should fall in H.
• B) wages and rents should rise in H.
• C) wages and rents should fall in H.
• D) wages should fall and rents should rise in H.
• E) rent will be unchanged but wages will rise in H.

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Definitions:

Interest Rates

The percentage charged or paid for the use of money, typically by a bank or financial institution on loans or savings.

Economy

The collective system of production, consumption, and trade of goods and services within a particular area or country.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, highlighting the trade-offs involved.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid by the borrower to the lender for the use of their funds.