In the short-run (specific-factors) model, an FDI inflow into a country's manufacturing sector will cause its production possibility frontier:
A) to shift outward for both sectors.
B) to shift inward.
C) to shift outward for manufacturing only.
D) to stay the same.

Question

Quizplus · Accepted Answer

In the short-run specific-factors model, an FDI inflow into a country's manufacturing sector will cause its production possibility frontier to shift outward for manufacturing only. This is because the influx of capital and technology into the manufacturing sector improves its productivity and increases output, while the agricultural sector remains unchanged.

In the Short-Run (Specific-Factors) Model, an FDI Inflow into a Country's