The specificfactors model assumes that in each industry (such as manufacturing and agriculture) there are factors of production that are:

When a U.S. firm sells a good abroad for, say, 100 euros (assume $1=1euro), U.S. net exports increase by $100. These $100 in exports can be accounted for as $100 increase in capital outflow because ________

A) if the 100 euros are kept in the foreign bank, the U.S. firm is giving a loan to that bank B) if the U.S. firm uses the 100 euros to buy a share of stock in a foreign firm, the firm is supplying U.S. capital to that foreign firm C) if the U.S. firm uses the proceeds to build a new factory in that country, it is supplying U.S. capital to that country D) all of the above E) none of the above

If the British pound (£) appreciates by 10% against the dollar:

a. both the US importers from Britain and US exporters to Britain will be helped by the appreciating pound. b. the US exporters will find it harder to sell to foreign customers in Britain. c. the US importer of British goods will tend to find that their cost of goods rises, hurting its bottom line. d. both US importers of British goods and exporters to Britain will be unaffected by changes in foreign exchange rates. e. all of the above.