The discovery of a significant new source of oil that can be exported will lead to:
A) depreciation of the currency and a loss of comparative advantage in other sectors.
B) depreciation of the currency and a gain of comparative advantage in other sectors.
C) appreciation of the currency and a loss of comparative advantage in other sectors.
D) appreciation of the currency and a gain of comparative advantage in other sectors.

Question

Quizplus · Accepted Answer

The discovery of a significant new source of oil will likely lead to an appreciation of the currency due to increased demand for the currency to purchase the oil. This can result in a loss of comparative advantage in other sectors, as the stronger currency makes exports from those sectors more expensive on the global market.

The Discovery of a Significant New Source of Oil That