Suppose a capital-abundant country experiences a significant increase in its capital stock. This change in endowments is most likely to lead to:

Question

Quizplus · Accepted Answer

With an increase in capital stock, the country becomes more productive and efficient in producing both capital and labor-intensive goods. This results in a comparative advantage in producing these goods which leads to an increased willingness to trade in the international market to exploit this advantage. Therefore, option D is the most appropriate answer.

Suppose a Capital-Abundant Country Experiences a Significant Increase in Its