According to the article, which of the following statements about the Dutch Disease are correct? Check all that apply.
A. As soon as a country's resource revenues begin to rise, the Dutch Disease is imminent.
B. Increased demand for nontraded goods increases prices in the nontraded goods sector, which boosts the real exchange rate.
C. The Dutch Disease can be cured by allowing manufacturing jobs to move freely to other countries.
D. When a country's currency appreciates, its manufacturing sector quickly gains competitiveness.
Answer (2)
The Dutch Disease involves various economic factors that affect a country's resource revenues. Out of the statements, only the one about increased demand for nontraded goods causing a rise in the real exchange rate is true. The other statements regarding the immediacy of Dutch Disease and the movement of manufacturing jobs are incorrect. ;
The correct answer regarding the Dutch Disease is that increased demand for nontraded goods leads to a rise in the real exchange rate. The other statements about imminent Dutch Disease, curing it through job relocation, and currency appreciation enhancing manufacturing competitiveness are incorrect.
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