Question

Which two factors are primarily assessed when using the qualitative approach to measure a country's economic risk?

Select one:
A. the country's purchasing power overseas and the consistency of the country's leadership
B. the competence of the country's leader and the economic policy direction
C. the country's natural resources and its long-term national debt
D. the probability of terrorism and the likelihood that the country's debts will be repaid

Answer 1

Economic risk qualitatively assesses the competence of a country's leader and the economic policy direction, alongside factors like purchasing power parity for meaningful economic comparisons.

Step-by-step explanation:

When assessing a country's economic risk using a qualitative approach, two primary factors are generally considered. These are: the competence of the country's leader and the economic policy direction. The leader's competence is vital as it can affect policymaking and ultimately the country's economic performance. The direction of economic policy involves the strategies that the government intends to implement to manage the economy, which includes fiscal policy, monetary policy, and international trade regulations, and these can heavily influence investment and business environments. It's also important to include a factor like purchasing power parity when measuring standards of living to compare GDP per capita in a meaningful way that accounts for price differences across countries, thus reflecting a more accurate economic picture.