Two Nations Each Own 50% of the Capital of the Other

question 17

Multiple Choice

Two nations each own 50% of the capital of the other nation (diversification) . What is the situation when labor composes more than 50% of available resources?

• A) In order to achieve perfect diversification, labor must move from one nation to the other.
• B) No gain will occur from the diversification.
• C) The risk from economic shock will be eliminated by the diversification of assets.
• D) Some risk from economic shocks can be eliminated, but not all.

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