The gravity model offers a logical explanation for the fact thatA) trade between Asia and the U.S. has grown faster than NAFTA trade.B) trade in services has grown faster than trade in goods.C) trade in manufactures has grown faster than in agricultural products.D) Intra-European Union trade exceeds International Trade of the European Union

According to the gravity model of trade, which of the following predict is true? Group of answer choices Countries will trade with each other even if they are similar. Distance is the most important measure in determining trade volume than GDP. If country A trades more with country B than with country C, B must be closer to A than C. Small countries tend to be more remote from each other than large countries.

Choose the wrong statement about the predictions of the gravity model Group of answer choices Small countries tend to be more remote from each other than large countries International border has a large detrimental effect on trade volumes Large countries tend to trade more More distant countries tend to trade less

Why does the gravity model work?A) Large economies became large because they were engaged in international trade.B) Large economies tend to have large incomes and tend to spend more on imports.C) Large economies have relatively large incomes, and hence spend more on governmentpromotion of trade and investment.D) Large economies tend to avoid trading with small economies.

The gravity model suggests that over timeA) world trade will eventually be swallowed by a black holeB) the value of trade between two countries will be proportional to the product of the twocountries’ GDPC) trade between Earth and other planets will become importantD) trade between all countries will increaseE) trade between neighboring countries will increase

Explain what are the proxies for trade costs in the Gravity Model of International Trade