We see that the Netherlands, Belgium, and Ireland trade considerably more with the UnitedStates than many other EU countries,A) this is explained by the gravity model since theydonot share bordersB) this is explained by the gravity model since these are large countriesC) this is explained by the gravity model since these are small countriesD) this fails to be consistent with the gravity model since these are small countriesE) this fails to be consistent with the gravity model since these are large countries

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 modelGroup of answer choicesLarge countries tend to trade moreMore distant countries tend to trade lessSmall countries tend to be more remote from each other than large countriesInternational border has a large detrimental effect on trade volumes

Consider the United States and the countries ittrades with the most (measured in trade vol-ume): Canada, Mexico, China, and Japan. Forsimplicity, assume these are the only fourcountries with which the United States trades.Trade shares and exchange rates for these fourcountries are as follows:Country Share of $ per FX $ per FX(currency) Trade in 2009 in 2010Canada (dollar) 36% 0.9225 0.9643Mexico (peso) 28% 0.0756 0.0788China (yuan) 20% 0.1464 0.1473Japan (yen) 16% 0.0105 0.0112a. Compute the percentage change from 2009to 2010 in the four U.S. bilateral exchangerates (defined as U.S. dollars per units offoreign exchange, or FX) in the table pro-vided.b. Use the trade shares as weights to computethe percentage change in the nominal effec-tive exchange rate for the United Statesbetween 2009 and 2010 (in U.S. dollars perforeign currency basket).c. Based on your answer to (b), what hap-pened to the value of the U.S. dollaragainst this basket between 2009 and2010? How does this compare with thechange in the value of the U.S. dollar rela-tive to the Mexican peso? Explain youranswer

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

. Trade between two countries can benefit both countries ifA) each country enjoys superior terms of trade.B) each country has a more elastic demand for the imported goods.C) each country has a more elastic supply for the exported goods.D) each country produces a wide range of goods for export.E) each country exports that good in which it has a comparative advantage.