Author Question: Why does the gravity model work? A) Large economies became large because they were engaged in ... (Read 65 times)

bclement10 · **on:** Jun 30, 2018

Why does the gravity model work?

A) Large economies became large because they were engaged in international trade.
B) Large economies have relatively large incomes, and hence spend more on government promotion of trade and investment.
C) Large economies have relatively larger areas which raises the probability that a productive activity will take place within the borders of that country.
D) Large economies tend to have large incomes and tend to spend more on imports.
E) Large economies tend to avoid trading with small economies.

Question 2

Economic growth at constant world prices will ________ cause the output of one good to fall absolutely.

A) never
B) sometimes
C) always