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If Country X Has a Relative Abundance of Capital and Country

Question 9

Multiple Choice

If country X has a relative abundance of capital and country Y has a relative abundance of labor, then the factor proportions theory predicts that:


A) if the two nations begin trading with one another, labor will move to country X and give it a relative abundance of both inputs.
B) if the two nations begin trading with one another, capital will flow to country Y and give it a relative abundance of both inputs.
C) country X will have a comparative advantage in producing capital-intensive products.
D) country Y will have a comparative advantage in producing capital-intensive products.

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