If in 2002, U.S. automobile exports were $100 billion and imports were $300 billion, the index of intra-industry trade would be:
A) 0.25.
B) 0.75.
C) 0.50.
D) 1.00.
E) 1.50.

Question

Quizplus · Accepted Answer

The index of intra-industry trade is calculated as 1 - (|exports - imports| / (exports + imports)). Plugging in the given values: 1 - (|$100 billion - $300 billion| / ($100 billion + $300 billion)) = 1 - ($200 billion / $400 billion) = 1 - 0.5 = 0.5.