Which of the following would one expect if there were no trade in goods but resources were free to move among countries?
a. Labor will immigrate from the capitalabundant country.
b. Labor will emigrate to the capitalabundant country.
c. Labor will emigrate to the capitalscarce country.
d. Labor will immigrate from the capitalscarce country.
Ans: b. Labor will emigrate to the capitalabundant country.
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An increase in the real wage would result in a
A) movement along the labor demand curve, causing an increase in the number of workers hired by the firm. B) shift of the labor demand curve, causing an increase in the number of workers hired by the firm. C) movement along the labor demand curve, causing a decrease in the number of workers hired by the firm. D) shift of the labor demand curve, causing a decrease in the number of workers hired by the firm.
Adoption of a guaranteed annual income with benefits (B) given by B = 20,000 -.5 (earnings) would be expected to reduce work effort by low wage workers because:
a. the income effect would outweigh the substitution effect of the plan. b. the substitution effect would outweigh the income effect of the plan. c. both substitution and income effects would operate to reduce work effort. d. the plan would make working financially unattractive.