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Questions and Answers
What concept explains the influence of an economy's size on trade?
What concept explains the influence of an economy's size on trade?
- $E = mc^2$
- $F = ma$
- Gravity model (correct)
- Comparative advantage theory
What factor reduces trade according to Chapter 2?
What factor reduces trade according to Chapter 2?
- Distance and borders (correct)
- $E = mc^2$
- $y = mx + b$
- $F = ma$
Flashcards
Gravity Model of Trade
Gravity Model of Trade
A model in international economics which predicts trade flows based on the size and distance between economies. Larger economies trade more; greater distances reduce trade.
Factors Reducing Trade
Factors Reducing Trade
Distance, borders, and other frictions (like tariffs or cultural differences) reduce the volume of trade between countries.
