Which of the Following Is One Conclusion of the Heckscher-Ohlin

question 8

Multiple Choice

Which of the following is one conclusion of the Heckscher-Ohlin model?

• A) In the real world, with unlimited goods, nations will buy products that satisfy their demands and sell products they have no use for.
• B) If there are limited resources, such as capital and land, production varies directly with the amount of labor used.
• C) Some factors of production are fixed and some are variable. We need only consider the variable factors when we analyze international trade.
• D) With two goods and two factors, each country will export the good that uses intensively the factor of production it has in abundance and will import the other good.

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Definitions:

Forward Exchange Rate

A contractually fixed exchange rate for the future exchange of currencies at a specified date, used to hedge against foreign exchange risk.

Arbitrage

The simultaneous purchase and sale of the same assets in different markets to exploit price differences for a profit.

Risk-free Rate

The expected yield from an investment that carries no risk of losing money, often identified by the returns on government bonds.

Futures Market

A financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.