Why does the gravity model work?
A)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.
D)Large economies became large because they were engaged in international trade.
E)Large economies tend to have large incomes and tend to spend more on imports.

Question

Quizplus · Accepted Answer

The gravity model works because large economies have large incomes, which means they have more purchasing power and tend to spend more on imports, leading to higher trade volumes.

Why Does the Gravity Model Work