8) The gravity model explains why

A) trade between the U.S. and Germany exceeds that between the U.S. and Sweden.

9) According to the Gravity Model, the reason why the United States trades more heavily with Germany, the United Kingdom, and France than with other countries in Europe is because of

A) the size of their economies.

B) their ties to the European Union.

C) mutual rights and responsibilities.

D) their currencies and trade policies.

10) According to the gravity model , a characteristic that tends to affect the probability of trade existing between any two countries is

B) the average weight/value of their traded goods.

C) their colonial-historical ties.

E) the number of different product varieties produced by their industries.

11) In general, which of the following do NOT tend to increase trade between two countries?

E) the existence of well controlled borders between countries

A) linguistic and/or cultural affinity

D) mutual membership in preferential trade agreements

12) Why does the gravity model work?

D) Large economies tend to have large incomes and tend to spend more on imports.

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) Large economies tend to avoid trading with small economies.

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.

E) Large economies tend to avoid trading with small economies.

13) We see that the Netherlands, Belgium, and Ireland trade considerably more with the United States than with many other countries.

C) This fails to be consistent with the gravity model, since these are small countries.

A) This is explained by the gravity model, since these are all large countries.

B) This is explained by the gravity model, since these are all small countries.

D) This fails to be consistent with the gravity model, since these are large countries.

E) This is explained by the gravity model, since they do not share borders.

14) The two neighbors of the United States do a lot more trade with the United States than European economies of equal size.

B) This is consistent with predictions from gravity models.

A) This contradicts predictions from gravity models.

C) This is irrelevant to any inferences that may be drawn from gravity models.

D) This is because these neighboring countries have exceptionally large GDPs.

E) This relates to Belgium's trade record with the U.S.

15) Trade between British Columbia and a Canada province is likely much larger than trade with an equally distant U.S. state because of

A) negative effects of the borders.

16) Which of the following does NOT explain the extent of trade between Ireland and the U.S.?

E) large numbers of Irish-Americans

2.2 The Changing Pattern of World Trade 1) Since the early 1970s, world's trade as a share of world production has

D) fluctuated widely with no clear trend.

E) increased slightly before dropping off.

2) What caused the ratio of world exports to world GDP to fall sharply before World War I and not return to 1913 level until 1970s?

C) Loss of interest among trading nations.

D) Invention of railroad and steamship.