In the Two-Sector (Manufacturing and Agriculture) Specific-Factors Model, an Increase

question 43

Multiple Choice

In the two-sector (manufacturing and agriculture) specific-factors model, an increase in the price of manufactured goods will cause a(n) :

• A) increase in the real rental of capital.
• B) decrease in the real rental of capital.
• C) change in the real rental of capital.
• D) decrease in the nominal wage in the manufacturing sector.