Question

War breaks out near Country A and B, limiting trade with nearby nations. Country A has a single resource economy and Country B has a diversified economy. Which country is more at risk for economic problems? Country A is more at risk because it has many types of products that it must find new trade partners to buy. Country A is more at risk because it has fewer types of goods to attract new trade partners. Country B is more at risk because it has fewer types of goods to attract new trade partners. Country B is more at risk because it does not have natural resources.

Answer 1

Country A is more at risk because it has fewer types of goods to attract new trade partners

Answer 2

Answer:

Country A is more at risk because it has fewer types of goods to attract new trade partners.

Explanation:

More diverse economies produce more goods and services that can be exchanged with other economies. However, when a country has an economy limited to a few types of resources, that country will rely more heavily on trading partners to sell those resources and buy the other types of goods. In a case of limited trade, the country with the greatest diversity (B) tends to be able to recover faster because its production matrix is diversified. However, when the country has a resource-poor economy (A), this can be severe when trade is limited. For example, Venezuela is a primarily oil-producing country and relies on imports of manufactures and food. However, the country has economic embargoes and the situation has deteriorated as the flow of trade has led to a shortage of supplies.