The difference between political risks and economic risks is that
A)political risks stem from instability or weakness in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies.
B)political risks stem from stability in foreign business, while economic risks stem from an excess of property right protections.
C)political risks stem from hostility to foreign currencies, while economic risks stem from the instability of the monetary system.
D)political risks stem from exchange rate fluctuations, while economic risks stem from hostility to foreign business.
E)political risks stem from the stability of a country's monetary system, while economic risks stem from instability in national business.

Question

Quizplus · Accepted Answer

Political risks refer to instability or weakness in national governments, such as changes in leadership or policies, social unrest, or violence, which may disrupt business operations or investments. Economic risks, on the other hand, stem from the stability of a country's monetary system, its economic and regulatory policies, inflation, tax rates, trade policies, and other factors that may affect the profitability or viability of foreign investments. While political risks may have economic consequences, such as changes in regulations or taxes, they are distinct from economic risks which can also arise from natural disasters or market fluctuations. Therefore, the most accurate option is A.

The Difference Between Political Risks and Economic Risks Is That