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?
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.
Based on the given information, the largest threat that the country would likely face by opening itself to the global economy is option B - the country's population will likely see a decrease in incomes and a rise in poverty.
Here's the step-by-step breakdown:
1. The country is currently isolated from the rest of the world in terms of trade and travel, meaning it has limited exposure to global economic forces.
2. The goods that the country produces are unique and have no substitutes, which suggests that they have a competitive advantage in the global market.
3. The majority of the country's residents are living below the international poverty threshold, indicating that they are already experiencing economic hardships.
4. Based on past trends, opening the country to the global economy would likely lead to increased competition from larger international firms.
5. Domestic businesses may struggle to compete with these larger international firms, potentially causing them to fail.
6. If domestic businesses fail, it would result in loss of jobs and decreased incomes for the country's population.
7. As a result, the country's population would likely face a decrease in incomes and a rise in poverty, making option B the largest threat in this scenario.
It's important to note that the other options are also potential threats, but they are not the largest threat as per the given information and past trends.
To determine the largest threat that the country is likely to face by opening itself to the global economy, let's analyze the given options and the context provided.
A. Domestic businesses will likely fail as they struggle to compete with larger international firms.
This option suggests that if the country opens itself to the global economy, domestic businesses may not be able to compete effectively with larger international firms. This can lead to the failure of domestic businesses and job losses, which could have a negative impact on the overall economy.
B. The country's population will likely see a decrease in incomes and a rise in poverty.
This option suggests that opening the country to the global economy may result in lower incomes for the population and an increase in poverty. Since the majority of the country's residents are already living below the international poverty threshold, this option implies that their economic conditions may worsen.
C. Domestic consumers will likely have fewer options for goods and services.
This option indicates that if the country opens itself to the global economy, domestic consumers may have fewer options for goods and services. Given that the goods produced in the country are not found anywhere else and have no substitutes, this option suggests that opening to global trade may result in a reduction in the availability of certain goods and services for domestic consumers.
D. The domestic economy will likely be more vulnerable to economic events in other countries.
This option states that if the country opens itself to the global economy, its domestic economy may become more vulnerable to economic events in other countries. This implies that external economic downturns or crises could have a significant impact on the domestic economy.
Based on the given context, it can be concluded that the largest threat the country is likely to face by opening itself to the global economy is:
B. The country's population will likely see a decrease in incomes and a rise in poverty.
This is because the majority of the country's residents already live below the international poverty threshold, and opening up to the global economy may lead to lower incomes and increased poverty levels. However, it is important to note that this is an analysis based on past trends and may not necessarily predict exact outcomes.