You are an International Economist working for the U.S. Government and you were given the following...

 

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You are an International Economist working for the U.S. Government and you were given the following data. TB (Trade Balance) represents the sum of exports and imports of each country with the US. Distance is measured in miles; the GDP and TB are also measured in millions of $. Distance to US (miles) GDP US (Mill) GDP (Mill) TB actual (Mill) Country A 65 21.5 2.70 1.25 Country B 75 21.5 3.80 1.15 Country C 66 21.5 0.21 0.05 Country D 75 21.5 0.17 0.10 Country E 60 21.5 0.44 0.20 Country F 32 21.5 2.00 0.90 a) Write down a gravity equation and explain why economists use it. b) Given the data above, identify which are the three largest economies (among the six countries) and explain how you identified it. c) Using the data above, rank the three largest economies based on their actual trade with the United States. d) Using the data above, calculate the predicted trade with the United States for all the countries using the gravity model. Rank the three largest economies based on their predicted trade with the United States. e) Does the ranking from d) match your answer in c)? Explain why it's out of whack. You are an International Economist working for the U.S. Government and you were given the following data. TB (Trade Balance) represents the sum of exports and imports of each country with the US. Distance is measured in miles; the GDP and TB are also measured in millions of $. Distance to US (miles) GDP US (Mill) GDP (Mill) TB actual (Mill) Country A 65 21.5 2.70 1.25 Country B 75 21.5 3.80 1.15 Country C 66 21.5 0.21 0.05 Country D 75 21.5 0.17 0.10 Country E 60 21.5 0.44 0.20 Country F 32 21.5 2.00 0.90 a) Write down a gravity equation and explain why economists use it. b) Given the data above, identify which are the three largest economies (among the six countries) and explain how you identified it. c) Using the data above, rank the three largest economies based on their actual trade with the United States. d) Using the data above, calculate the predicted trade with the United States for all the countries using the gravity model. Rank the three largest economies based on their predicted trade with the United States. e) Does the ranking from d) match your answer in c)? Explain why it's out of whack.

Answer rating: 100% (QA)

a The gravity equation is used to measure the trade between two countries The equation takes into account the distance between the two countries the GDP of the two countries and the trade balance betw... View the full answer