The situation where exports of a commodity lead to an appreciating exchange rate and a loss of other types of exports is known as:
A) Friedman's dilemma
B) the free lunch problem
C) Asian contagion
D) Dutch disease
E) Euro disease

Question

Quizplus · Accepted Answer

Dutch disease refers to the negative consequences arising from a large increase in a country's income, such as from a natural resource discovery, which leads to an appreciation of the currency. This appreciation makes other sectors, like manufacturing and agriculture, less competitive in international markets, potentially harming those sectors.

The Situation Where Exports of a Commodity Lead to an Appreciating