Germany, a Relatively Capital Abundant Nation, Has Extensive Trade Ties

Multiple Choice

Germany, a relatively capital abundant nation, has extensive trade ties with South Korea, a relatively labor abundant nation. As free trade expands between the two nations, the Stolper-Samuelson theorem would predict that:

A) the real return to both labor and capital would rise in Germany.
B) the real return to both labor and capital would decline in Germany.
C) the real return to labor in Germany would rise while the real return to capital in Germany would decline.
D) the real return to labor in Germany would decline while the real return to capital in Germany would rise.