In the Heckscher Ohlin model, free trade in goods will lead to
A. increase in wage rate in the labour abundant country
B. increase in wage rate in the capital abundant country
C. decrease in wage rate in the labour abundant country
D. decrease in rental in the capital abundant country
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Theories of international trade has come up 151 times in 6 exams since 2006.
This question is on Factor price equalisation and the Stolper-Samuelson theorem, part of Theories of international trade in International Economics.
How trade changes returns to factors and whether it equalises them across countries.
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Question from the JNU SIS 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.