In the Long Run, If All Resources Can Move Within

question 145

Multiple Choice

In the long run, if all resources can move within a nation, an inflow of FDI will:

• A) increase production in the capital-intensive sectors as capital becomes cheaper.
• B) increase production in the labor-intensive sector as capital becomes less desirable.
• C) lower wages.
• D) decrease the production of capital-intensive goods.

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Definitions:

Gain

The financial benefit that occurs when the selling price of an asset exceeds its purchase price or carrying value.

Loss

A financial condition where expenses exceed revenues, indicating negative financial performance.

Financing Activities

Transactions that result in changes to the size and composition of the equity capital or borrowings of a company.