Question
Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in agricultural output. What will happen to the
- Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in agricultural output. What will happen to the return (rental) on capital when trade occurs?
A) It will fall.
B) It will rise.
C) It will not change.
D) It will first fall, then rise.
2.Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. What will happen to the marginal product of capital used in manufacturing production when trade occurs?
A) It will fall.
B) It will rise.
C) It will not change.
D) It will first fall, then rise.
3.Suppose that the home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in agricultural output. What will happen to the return (rental) on land when trade occurs?
A) It will fall.
B) It will rise.
C) It will not change.
D) It will first fall, then rise.
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Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
