What did the gravity equation predict about trade within the
Borders of a nation?
A)Trade between states or regions within a nation is much more likely than trade outside the borders.
B)Trade between states or regions within a nation is much less likely to occur.
C)There was no predictive value for trade within a nation's borders.
D)Trade between states or regions within a nation is more subject to national law and regulation and therefore not as
Predictable.

Question

Quizplus · Accepted Answer

The gravity equation predicts that trade is more likely to occur between regions or states that are closer to each other and have larger populations. Therefore, trade between regions within a nation is more likely than trade outside of its borders. This is known as the "home bias" in trade.

What Did the Gravity Equation Predict About Trade Within the