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The HO Model Assumes That When an Economy Shifts from No

Question 7

Multiple Choice

The HO model assumes that when an economy shifts from no trade to free trade, the shifts in productive inputs from one industry to another:


A) cause suboptimal consumption decisions while consumers evaluate their new options relative to their past habits.
B) result in the abandonment of equipment and buildings (capital) in declining industries.
C) result in the loss of human capital because workers find their old skills are not needed and they must invest in learning new skills.
D) All of the above.
E) None of the above.

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