Question
The GDPs of countries A, B, and C are $1,000, $2,000, and $3,000, respectively. There are 1,000 miles between country A and B and 2000
The GDPs of countries A, B, and C are $1,000, $2,000, and $3,000, respectively. There are 1,000 miles between country A and B and 2000 miles between countries B and C. Assume that their markets are monopolistically competitive. Does the gravity equation predict that there will be more trade between A and B or between B and C?
Hint: Use the Gravity model formula and assume T = 1
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The Economic Consequences Of The Peace
Authors: John Maynard Keynes
1st Edition
1420905856, 9781420905854
