Which of the following is true of the gravity model?
A. The gravity model states that the trade flows between two countries are proportional to the countries' land masses.
B. The gravity model states that the trade flows between two countries are directly proportional to their gross domestic product (GDP).
C. The gravity model states that trade flows between a developing and a developed nation are usually unidirectional.
D. The gravity model emphasizes the role of the government to generate adequate gains from trade.
Answer: B
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A) real interest rate; nominal interest rate B) nominal wage rate; real wage rate C) real wage rate; nominal wage rate D) nominal interest rate; real interest rate E) inflation rate; real wage rate
The vicious circle of poverty is the trap in which the LDC is too poor to save and therefore it cannot invest and remains poor
a. True b. False Indicate whether the statement is true or false
If the business taxes decreased for a firm, then we might expect investment spending to: A. increase.
A. increase. B. decrease. C. remain constant. D. there is not enough information to determine what would happen.
The secular trend growth rate in the United States is approximately:
A. 5 to 5.5 percent per year. B. 1 to 1.5 percent per year. C. 2.5 to 3.5 percent per year. D. 7 to 7.5 percent per year.