Economist Jan Tinbergen developed a formula, called ______,
To predict which nations would engage in bilateral trade.
A)the trade deficit equation
B)the index of equality
C)the Tinbergen ratio
D)the gravity equation of trade

Question

Quizplus · Accepted Answer

The formula developed by Jan Tinbergen to predict which nations would engage in bilateral trade is known as the gravity equation of trade. This formula suggests that the trade between two countries is directly proportional to the size of their economies and inversely proportional to the distance between them. Hence, option D, the gravity equation of trade, is the correct answer. The other answer choices, i.e., the trade deficit equation, the index of equality, and the Tinbergen ratio, do not relate to the specific formula developed by Jan Tinbergen to predict bilateral trade.

Economist Jan Tinbergen Developed a Formula, Called ______