Assume a Nation Where Labor Is Mobile Between Industries but Capital

question 4

Multiple Choice

Assume a nation where labor is mobile between industries but capital is not.The specific-factors model states that trade leads to which of the following?

• A)A reduction in the return to capital used to produce the nation's export commodity
• B)A reduction in the return to capital used in the nation's import-competing industry
• C)An increase in the return to labor used in the production of both imports and exports.
• D)Ambiguous outcomes in the return to all capital.

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Definitions:

Regressive

A term often used to describe taxes where the tax rate decreases as the taxable amount increases.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, representing the tax rate applied to each additional dollar of income.

Average Tax Rate

The fraction of total income that is paid as taxes, calculated by dividing the total tax amount by the total income.

Progressive

Progressive, in an economic context, refers to a taxation or policy structure where the tax rate increases as the taxable base amount increases, often aimed at reducing income inequality.