If We Use the Short-Run (Specific-Factors) Model to Model FDI

question 29

Multiple Choice

If we use the short-run (specific-factors) model to model FDI movement from one nation to another, then wages in the recipient nation:

• A) decline absolutely.
• B) rise as a result of an increase in the marginal product of labor.
• C) are not affected.
• D) decline relatively, as capital competes with labor but not absolutely.

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