1. The predictive power of the Heckscher-Ohlin model, at least in terms of forecasting the volume of trade, appears to undergo improvement upon abandonment of the assumption
A) that technologies vary across countries.
B) of 2 countries, 2 factors, and 2 goods.
C) that technologies are the same across countries.
D) that trading goods is an indirect way of trading factors.
2. The gravity model states that trade between two countries will increase if the size of either country’s economy increases and the distance between the two countries is bigger. True or False?
A) True
B) False
3. While the Ricardian model predicts that there will be wage differences in the world as a result of differences in technology, the specific sector model suggests that wages should equalize as a consequence of international trade. True or False?
A) True
B) False