Asked by Hassan ibrahim on Jul 18, 2024
Verified
Joleen is an economist, and she strongly supports the Heckscher-Ohlin theory of trade. She believes that free-trade theories do not capture the entire picture and often offer a narrow view when it comes to trade aspects that contribute to a nation's economic growth. Which of the following statements supports Joleen's belief?
A) Protectionist policies, subsidies, and taxes form the basis for healthy trade relations.
B) Economic growth primarily depends on trade specialization.
C) Abundant factor endowments of a country form a basis for trade.
D) Consumer preferences play a negligent role in adopting trading patterns.
Heckscher-Ohlin Theory
An economic theory stating that countries will export products that utilize their abundant and cheap factor(s) of production and import products that require resources that are rare or expensive domestically.
Factor Endowments
The quantities of various resources a country possesses, which can affect its comparative advantage in international trade.
Free-Trade Theories
Economic theories advocating for the elimination of barriers to the exchange of goods and services between nations, to encourage trade and economic growth.
- Comprehend how factor endowments influence the trade dynamics of nations.
Verified Answer
AS
Alisson SimiyuJul 25, 2024
Final Answer :
C
Explanation :
The Heckscher-Ohlin theory posits that countries will export goods that utilize their abundant and cheap factors of production, and import goods that require factors of production that are scarce. This theory supports the idea that a country's factor endowments (e.g., land, labor, capital) significantly influence its trading patterns, aligning with statement C.
Learning Objectives
- Comprehend how factor endowments influence the trade dynamics of nations.