.1.Canada produces agricultural products using land and manufactured products using capital . When Canada engages in free trade , it starts exporting agricultural products , ( the price of agricultural products increases ). In the short run , which one of the following scenarios takes place ? O.Nominal returns on both land and capital increase. O.Both nominal and real returns on land increase. O.Nominal return on capital increases while real return on capital falls. O.Nominal return on land decreases while real return on land remains the same.
Q.1.Canada produces agricultural products using land and manufactured products using capital . When Canada engages in free trade , it starts exporting agricultural products , ( the
In the short run , which one of the following scenarios takes place ?
O.Nominal returns on both land and capital increase.
O.Both nominal and real returns on land increase.
O.Nominal return on capital increases while real return on capital falls.
O.Nominal return on land decreases while real return on land remains the same.
Q.2.
A simultaneous increase in the quantity of a good sold accompanied with the increase in the price of this good
O. is typical for the case of a demand shock.
O.negatively affects farmers growing coffee.
O.violates the
O. is typical for the case of a supply shock.
Q.3
Consider an open , trading economy with two sectors : agriculture and production of cars . There are two factors used in the production of both industries : labor , mobile between the industries , land specific to agricultural production and capital specific to the production of cars . Workers spend most of their earnings on agricultural products . Formation of free trade area led the decrease in the prices of both goods by 5 % . Which one of these observations will apply ?
O. The labor / capital ratio increases in both sectors
O. Labor force allocation remains the same
O. None of the other three options are correct.
O. The manufacturing sector now uses relatively more labor
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