In the shortrun (specificfactors) model, foreign direct
Investment is expected to ________ the marginal
Product of labor and ________ wages in the receiving
Country.
A)decrease; decrease
B)increase; decrease
C)decrease; increase
D)increase; increase

Question

In the short­run (specific­factors) model, foreign direct
Investment is expected to ________ the marginal
Product of labor and ________ wages in the receiving
Country.
A)decrease; decrease
B)increase; decrease
C)decrease; increase
D)increase; increase

Quizplus · Accepted Answer

In the short-run specific-factors model, foreign direct investment increases the capital stock, which raises the marginal product of labor and, consequently, increases wages in the receiving country.

In the Short­run (Specific­factors) Model, Foreign Direct

In the Shortrun (Specificfactors) Model, Foreign Direct