Question: 8. Consider a situation in which two countries (A and B) are producing with identical technology a single good with labour and capital, and that
8. Consider a situation in which two countries (A and B) are producing with identical technology a single good with labour and capital, and that initially there is the same quantity of labour in both countries, but there is larger quantity of capital in country B (than in A). Free movement of capital from B to A will: (a) increase the GDP of both countries (b) increase the wage rate in both countries (c ) increase capitalists' incomes in both countries (d) decrease the wage rate in both countries (e ) none of the above
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
