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 between regions or states that are closer to each other in terms of distance and have larger economic sizes. Since regions within a nation are typically closer in distance and have larger economic sizes than regions outside the nation's borders, the prediction is that trade within a nation is much more likely to occur than trade outside the borders.

What Did the Gravity Equation Predict About Trade Within the Borders