What is the impact of opening trade on the real wage

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Reference no: EM131094429

Suppose when Russia opens to trade, it imports cars, a capital intensive good. (Consider the following Heckscher-Ohlin model.)

(1) According to the Heckscher-Ohlin model, is Russia capital-abundant or labor-abundant? Why?

(2) What is the impact of opening trade on the real wage in Russia? Briefly explain.

(3) What is the impact of opening trade on the real rental rate of capital in Russia? Briefly explain.

(4) Who, capital owners or workers, would support policies that limit free trade? Briefly explain.

Reference no: EM131094429

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