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Suppose Germany and France only trade with each other. Each produces bread and cheese using labour and capital. Germany is relatively abundant in capital. According
Suppose Germany and France only trade with each other. Each produces bread and cheese using labour and capital. Germany is relatively abundant in capital. According to the Stolper-Samuelson theorem, free trade between France and Germany should result in: Question 3 options: increased real wages in both countries. decreased real wages in both countries. decreased real wages in Germany and increased real wages in France. There is not enough information given to answer this question -- we need to know if the production of bread is relatively labour intensive or relatively capital intensive. increased real wages in Germany and decreased real wages in France
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