The simple immigration model assumes that the capital stock is constant in each country. If this assumption is relaxed, then the
A) rise in business income in the low-wage country will increase the return on capital, which will increase the demand for labor.
B) fall in business income in the low-wage country will decrease the return on capital, which will decrease the demand for labor.
C) rise in business income in the low-wage country will decrease the return on capital, which will decrease the demand for labor.
D) fall in business income in the low-wage country will increase the return on capital, which will increase the demand for labor.
Correct Answer:
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