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Exam 1 - International Trade Texas A&M University Spring...

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International Trade Exam I Texas A&M University ECON 452-500 Spring 2006 Prof: Diego Vacaflores Name: ____________________________________________________ 1. According to the gravity model, a characteristic that tends to affect the probability of trade existing between any two countries is (a) their cultural affinity (b) the average weight/value of their traded goods (c) their colonial—historical ties (d) the distance between them (e) the number of varieties produced on the average by their industries. 2. That Ohio’s trade with British Columbia is less than Ontario’s trade with British Columbia (each measured as a percentage of GDP) best illustrates the impact of what for trade volumes? 3. In “National Borders Matter: Canada-U.S. Regional Trade Patterns”, by J. McCallum, the following estimates are calculated ij j i ij D Y Y T ln 54 . 1 ln 03 . 1 ln 18 . 1 06 . 3 ln + + = From this, we can conclude that 4. In the gravity model, large economies import more because
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