quiz149_solution

quiz149_solution - 1. Why does the gravity model work? a)...

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1. 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) None of the above. 2. 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 3. In general which of the following tend to promote the probability of trade volumes between two countries a) linguistic and/or cultural affinity. b) historical ties. c) sizes of economies. d) mutual membership in preferential trade agreements. e) All of the above. Country A Country B Labor hours to make 1X 4 5 Labor hours to make 1Y 2 4 Labor hours available
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This note was uploaded on 05/23/2011 for the course ECON 231 taught by Professor Rus during the Fall '08 term at Waterloo.

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quiz149_solution - 1. Why does the gravity model work? a)...

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