International Trade CH 2 HW Exam
Questions And Answers.
Canada and Australia are (mainly) English-speaking countries with populations that are not too
different in size (Canada's is 60 percent larger). But Canadian trade is twice as large, relative to
GDP, as Australia's.
Why should this be the case? (Mark all that apply.) - Answer Transportation costs for imports
and exports are higher in Australia because of the distance the distance goods must travel.
Canada is close to a major economy.
Mexico and Brazil have very different trading patterns. Mexico trades mainly with the United
States and Brazil trades about equally with the United States and with the European Union.
Mexico does much more trade relative to its
These differences can be explained via the gravity model. Which of the following equations is
the most general form of the gravity model? - Answer Tij = A x (Yai x Ybj ) / (Dijc)
Mexico is quite close to the U.S., but it is far from the European Union (E.U.). So it makes sense
that it trades largely with the U.S. Brazil is far from both, so its trade is split between the two.
Do you agree or disagree? Based on the gravity model, I would - Answer agree. The gravity
model predicts trade volume is proportional to the product of the GDPs of the trading partners
and inversely related to the distance from each other.
Over the last few decades, East Asian economies have increased their share of world GDP.
Similarly, intra-East Asian tradelong dash—that is, trade among East Asian nationslong dash—
has grown as a share of world trade. More than that, East Asian countries do an increasing
share of their trade with each other.
Using the gravity model, explain why East Asian countries do an increasing share of their trade
with each other. - Answer Since the GDP of East Asian countries has grown, the product of any
two East Asian countries' GDP is now larger. And as the gravity model predicts, the trade volume
between them has grown.
In general, which of the following tends to promote the probability of trade volumes between
two countries? - Answer - Sizes of Economies.
- Linguistic and/or cultural affinity.
- Mutual membership in preferential trade agreements.
- Historical ties.
Questions And Answers.
Canada and Australia are (mainly) English-speaking countries with populations that are not too
different in size (Canada's is 60 percent larger). But Canadian trade is twice as large, relative to
GDP, as Australia's.
Why should this be the case? (Mark all that apply.) - Answer Transportation costs for imports
and exports are higher in Australia because of the distance the distance goods must travel.
Canada is close to a major economy.
Mexico and Brazil have very different trading patterns. Mexico trades mainly with the United
States and Brazil trades about equally with the United States and with the European Union.
Mexico does much more trade relative to its
These differences can be explained via the gravity model. Which of the following equations is
the most general form of the gravity model? - Answer Tij = A x (Yai x Ybj ) / (Dijc)
Mexico is quite close to the U.S., but it is far from the European Union (E.U.). So it makes sense
that it trades largely with the U.S. Brazil is far from both, so its trade is split between the two.
Do you agree or disagree? Based on the gravity model, I would - Answer agree. The gravity
model predicts trade volume is proportional to the product of the GDPs of the trading partners
and inversely related to the distance from each other.
Over the last few decades, East Asian economies have increased their share of world GDP.
Similarly, intra-East Asian tradelong dash—that is, trade among East Asian nationslong dash—
has grown as a share of world trade. More than that, East Asian countries do an increasing
share of their trade with each other.
Using the gravity model, explain why East Asian countries do an increasing share of their trade
with each other. - Answer Since the GDP of East Asian countries has grown, the product of any
two East Asian countries' GDP is now larger. And as the gravity model predicts, the trade volume
between them has grown.
In general, which of the following tends to promote the probability of trade volumes between
two countries? - Answer - Sizes of Economies.
- Linguistic and/or cultural affinity.
- Mutual membership in preferential trade agreements.
- Historical ties.
