How Can We Model the Long-Run Effect of FDI Flows

question 60

Multiple Choice

How can we model the long-run effect of FDI flows on wages and rentals?

• A) Use a simple supply-and-demand approach.
• B) Use the Ricardian comparative advantage model.
• C) Use the Heckscher-Ohlin model with the assumption that capital can migrate.
• D) Use the Rybczynski theorem.

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Definitions:

Stock Price

The market value of a single share of a company's stock.

Marginal Tax Rate

The rate at which the next dollar of taxable income will be taxed, indicating the tax bracket into which the last dollar of income falls.

Dividend Payout

The portion of a company's earnings that is distributed to its shareholders as dividends.

Capital Gains

The profit earned from the sale of assets or investments that have increased in value over the time they were held.