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Trade liberalization agreement

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Please tell me true or false, and why?

A flow of capital from one small open economy to another due to a trade liberalization agreement (e.g., the NAFTA between the canada and Mexico) will cause production of the receiving country's more capital-intensive industry to increase and production of the receiving country's more labor-intensive industry to decrease. Assume no change in industry prices.

Reference no: EM131703729

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