Question

3. When Wassily Leontief tested the predictions of the Heckscher-Ohlin theory, he found that in 1947 the United States was exporting relatively labor-intensive goods and importing relatively capital-intensive goods. This finding: A. Contradicted the Heckscher-Ohlin theory as the United States was relatively capital-abundant. B. Contradicted the Heckscher-Ohlin theory as the United States was relatively labor-abundant. C. Was never duplicated by other studies and has thus been labeled a paradox. D. Fit the predictions of the Heckscher-Ohlin theory concerning the trading patterns of a capital-abundant country.

Answer 1

Answer:

A. Contradicted the Heckscher-Ohlin theory as the United States was relatively capital-abundant.

Explanation:

When Wassily Leontief tested the predictions of the Heckscher-Ohlin theory, he found that in 1947 the United States was exporting relatively labor-intensive goods and importing relatively capital-intensive goods. This finding: "Contradicted the Heckscher-Ohlin theory as the United States was relatively capital-abundant."

This is because Heckscher-Ohlin theory states that countries usually export commodities, and resources they have in excess, while in return, they import the commodities and resources they need.

However, given that the United States is a country that was relatively capital-abundant, Wassily Leontief's finding is considered to be a contradiction.