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

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 is consistent with the general findings of the gravity equation, which suggests that trade is positively related to the size of the economies of the trading partners.

What Do Tests of the Gravity Equation for Trade Between