What is meant by the 'Dutch disease' (Hollandse ziekte) in international economics?
Answer and explanation
Correct answer: D. A natural resource boom causes currency appreciation that harms other export sectors like manufacturing
- Step 1: Coined by The Economist in 1977 to describe the Netherlands after the 1959 Slochteren natural gas discovery. Step 2. Massive gas exports caused the Dutch guilder to appreciate sharply, rendering Dutch non-gas manufacturing uncompetitive internationally and causing deindustrialization. Answer: A natural resource boom causes currency appreciation that harms other export sectors like manufacturing. Why not the others: Tulip mania occurred in 1637; the term is not a medical infection or flood cost.
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