Which of the Following Is True of the Gravity Model

question 6

Multiple Choice

Which of the following is true of the gravity model?

• A)The gravity model states that the trade flows between two countries is independent of the geographical distance between them.
• B)The gravity model emphasizes on the role of the government to generate adequate gains from trade.
• C)The gravity model states that trade flows between a developing and a developed nation is usually unidirectional.
• D)The gravity model states that the trade flows between two countries is directly proportional to their GDP.

---

Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, not including cash equivalents.

Accumulated Depreciation

Accumulated depreciation represents the total depreciation expense that has been recorded against a fixed asset from the time it was acquired until the present day.

Current Year

The period of time from January 1 to December 31 of the present calendar year.

Depreciation Expense

The distribution of a tangible asset's cost throughout its lifespan.