In the shortrun (specificfactors) model, foreign direct
Investment is expected to cause a(n) ________ in the
Production of the capitalintensive good and a(n)
________ in the production of the landintensive good
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 cause a(n) ________ in the
Production of the capital­intensive good and a(n)
________ in the production of the land­intensive good
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 production of the capital-intensive good due to the influx of capital, while the production of the land-intensive good decreases as resources shift towards the capital-intensive sector.

In the Short­run (Specific­factors) Model, Foreign Direct

In the Shortrun (Specificfactors) Model, Foreign Direct