Final answer:
The statement is true because political stability is closely intertwined with economic conditions. Economic challenges can lead to political instability, while stable economies tend to support political stability by fostering growth and reducing public dissatisfaction.
Step-by-step explanation:
The statement that political stability is very closely related to its economic environment can be regarded as true. Political instability often goes hand in hand with economic challenges such as poverty and homelessness, leading to social unrest. An unstable economic environment can lead to harmful swings that not only stall growth but also discourage investments and spending, thereby affecting the political climate. Conversely, stable economies with good infrastructure can attract foreign investment, create jobs, and stimulate growth, which in turn can support political stability by reducing dissatisfaction with the government.
Political issues such as corruption, poor governance, and human rights violations can severely impact the economic stability of a country. For example, Ecuador's adoption of the US dollar in 2000 may have brought some economic stability but did not address underlying political challenges. Furthermore, countries like Haiti and Madagascar exemplify how political turmoil can exacerbate poverty and limit economic growth. Developing countries may also be exempt from certain treaty requirements while they work on developing stable industrial and governmental frameworks, indicating the interplay between political and economic conditions.