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

Economics

You might also like to view...

Compared to private bargaining, using eminent domain to acquire land generally

A) keeps negotiation costs low. B) is more time consuming and less successful. C) reduces cooperative surplus. D) is frowned upon by the government.

Economics

Subprime mortgages are

A) mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgages. B) mortgages issued to borrowers with flawed credit histories. C) mortgages which are bundled together by financial institutions and sold to investors. D) government-backed mortgages issued by Fannie Mae and Freddie Mac.

Economics