True or False. Please explain why with proper reasoning, mathematical arguments, or graphs. 1. Growth in...

True or False. Please explain why with proper reasoning, mathematical arguments, or graphs.

1. Growth in capital always make average people better-off.

2. FDI in a small, labor-abundant country has an ultra-antitrade production effect.

Solutions

Expert Solution

1. Growth in capital always make average people better-off.

This statement is true, because productivity growth allows people to achieve a higher material standard of living without having to work extra hours or to experience the same material standard of living while spending fewer hours in the compensated labor force.

Growth in capital goods will increase the consumer goods,which show the people in better-off situation.

Following diagram explain this;

2. FDI in a small, labor-abundant country has an ultra antitrade production effect.

This statement is true, because Ultra-antitrade production effect: production of import good increases while the production of export good decreases. As income enhances, consumption can be in four different regions. So FDI in a small, labor-abundant country has an ultra antitrade production effect.

Diagram:-2

Rahul Sunny answered 1 year ago

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