Author Question: Suppose that there are two factors, capital and land, and that the United States is relatively land ... (Read 93 times)

Themember4 · **on:** Jun 30, 2018

Suppose that there are two factors, capital and land, and that the United States is relatively land endowed while the European Union is relatively capital-endowed. According to the Heckscher-Ohlin model

A) European capitalists should support U.S.-European free trade.
B) European landowners should support U.S.-European free trade.
C) all capitalists in both countries should support free trade.
D) all landowners should support free trade.
E) the U.S. should compensate European countries once trade commences.

Question 2

If the nominal interest rate is 2.9 percent and the rate of inflation is 0.6 percent in a given year, then what is the corresponding real rate of return?

A) 3.5 percent
B) 2.3 percent
C) -3.5 percent
D) None of the above.