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The actual annual trade between Italy and China is $55 billion and annual trade between China and the U.S. is $650 billion. Note that Italy's GDP is $2 trillion, China's GDP is $13 trillion, and the U.S.' GDP is $21 trillion.
The distance between Italy and China is 7600 km.
The distance between China and the U.S. is 11700 km.
Calculate the predicted trade ratio
Calculate the actual trade ratio
What predictions does the simple gravity model make for trade between (1) Italy and China and (2) China and the United States
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