Equation (2.1) says that trade between any two countries is proportional to the product of their GDPs.

Question:

Equation (2.1) says that trade between any two countries is proportional to the product of their GDPs. Does this mean that if the GDP of every country in the world doubled, world trade would quadruple? Analyze this question using the simple example shown in Table 2-2.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

International Economics Theory & Policy

ISBN: 9780138002121

8th Edition

Authors: Paul R Krugman, Maurice Obstfeld

Question Posted: