Question

1. If country X has a relative abundance of capital and country Y has a relative abundance of labor, then the factor proportions theory predicts that:

Select one:

a. if the two nations begin trading with one another, labor will move to country X and give it a relative abundance of both inputs.

b. if the two nations begin trading with one another, capital will flow to country Y and give it a relative abundance of both inputs.

c. country X will have a comparative advantage in producing capital-intensive products.

d. country Y will have a comparative advantage in producing capital-intensive products.

2.Of the following regions, which currently receives the largest share of World Bank assistance?

Select one:

a. Africa

b. South Asia

c. Europe and Central Asia

d. the Middle East and North Africa

3. Which of the following is not a constituent institution of the World Bank?

Select one:

a. World Trade Organization

b. International FINANCE CORPORTATION

c. International Bank for Reconstruction and Development

d. International Center for Settlement of Investment Disputes

Answer 1

1. If country X has a relative abundance of capital and country Y has a relative abundance of labor, then the factor proportions theory predicts that:

c. country X will have a comparative advantage in producing capital-intensive products: This is because the concept of comparative advantage explains that a country should specialise in the production of that good which uses the abundant resource of that country intensively. Hence, in this case X will have a comparative advantage in producing capital-intensive products as it has a relative abundance of capital.

2. The country which currently receives the largest share of World Bank assistance is: a. Africa

3. a. World Trade Organization is not a constituent institution of the World Bank. Its a separate organization which deals with the rules governing the trade across nations.