The effects of commodity exports on the exchange rate and non-commodity exports is known as:

Question

Quizplus · Accepted Answer

The term Dutch disease refers to the negative effects experienced by an economy that is heavily dependent on commodity exports. In particular, it describes how the influx of revenue from commodity exports can cause a country's exchange rate to appreciate, making non-commodity exports more expensive and therefore less competitive on the global market. This phenomenon is named after the Dutch experience in the 1960s, where the discovery of natural gas led to an appreciation of the exchange rate and a decline in the manufacturing sector.

The Effects of Commodity Exports on the Exchange Rate and Non-Commodity