What did the gravity equation predict about trade within the borders of a nation?
a. Trade between states or regions within a nation is much more likely than trade outside the borders.
b. Trade between states or regions within a nation is much less likely to occur.
c. There was no predictive value for trade within a nation's borders.
d. Trade between states or regions within a nation is more subject to national law and regulation and therefore not as predictable.
Ans: a. Trade between states or regions within a nation is much more likely than trade outside the borders.
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The rate at which a price index decreases is referred to as the:
A) cross inflation rate. B) deflation rate. C) reverse inflation rate. D) depreciation rate.
A technological innovation that increases the marginal physical product of capital would eventually result in a(n)
a. increase in the interest rate b. decrease in the interest rate c. shift to the right of the supply curve of loanable funds d. increase in the quantity demanded of loanable funds and a decrease in the quantity supplied of loanable funds, which leaves the interest rate unchanged e. shift to the left of the supply curve of loanable funds