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the gravity model of trade explains why the us has strong trade relationships with iceland. true...

the gravity model of trade explains why the us has strong trade relationships with iceland. true or false?

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Answer #1

According to the Office of the US Trade Representative, Iceland is the USA's 102nd largest trading partner.

The Gravity Model of the trade defines the efficiency of bilateral trade between the nations based on the size of there economy and the distance between the two countries.

Now we know that the distance between the US - Iceland is more as compared to other european countries, also the size of the US economy if far bigger than that of the iceland, thus the application of the gravity model of trade is not an efficient way to justify the strong trade relations between this nations.

Thus the above statement is False.

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