Capital flight?

Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land Note that wages are the returns to labor and rents are the returns to land According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B: A. wages and rents should fall in Country A B. wages and rents should rise in Country A C. wages should rise and rents should fall in Country A D. wages should fall and rents should raise in Country A?

Ans: wages should rise and rents should fall in Country ARead →

MCQ #39

Import substitution is the replacement of ____ by domestic production ________ protection of ________?

Ans: imports, high tariffs or import quotasRead →