What do tests of the gravity equation for trade between
Canadian provinces and American states indicate?
A)Individual state and individual provincial GDPs are negatively related to the amount of trade between individual states and
Provinces.
B)Individual state and individual provincial GDPs are positively related to the amount of trade between individual states and
Provinces.
C)Individual state and individual provincial GDPs are not at all related to the amount of trade between individual states and
Provinces.
D)The gravity equation does not apply to U.S.Canadian trade.

Question

What do tests of the gravity equation for trade between
Canadian provinces and American states indicate?
A)Individual state and individual provincial GDPs are negatively related to the amount of trade between individual states and
Provinces.
B)Individual state and individual provincial GDPs are positively related to the amount of trade between individual states and
Provinces.
C)Individual state and individual provincial GDPs are not at all related to the amount of trade between individual states and
Provinces.
D)The gravity equation does not apply to U.S.­Canadian trade.

Quizplus · Accepted Answer

Tests of the gravity equation for trade between Canadian provinces and American states indicate that individual state and individual provincial GDPs are positively related to the amount of trade between individual states and provinces. This suggests that larger economies tend to trade more with each other, which is consistent with the theory behind the gravity equation.

What Do Tests of the Gravity Equation for Trade Between