A small country is currently isolated from the rest of the world in terms of trade and travel. The goods that the country produces are not found anywhere else and have no substitutes. Additionally, the majority of the country's residents are living below the international poverty threshold of $1.90 per day. Using past trends as a guide, which of the following is the largest threat that the country would likely face by opening itself to the global economy?

Question

A.Domestic businesses will likely fail as they struggle to compete with larger international firms
B.The country's population will likely see a decrease in incomes and a rise in poverty.
C.Domestic consumers will likely have fewer options for goods and services.
D.The domestic economy will likely be more vulnerable to economic events in other countries.

Answer 1

B. The country's population will likely see a decrease in incomes and a rise in poverty.