Asked by Nicole Guerrero on Jun 06, 2024
Verified
Markets reacted positively to the United States Mexico Canada Agreement (USMCA) as a replacement for NAFTA. If the agreement failed to be ratified by congress, the resulting negative economic impact would be an example of __________.
A) political risk.
B) interest rate risk.
C) volatility.
D) currency risk.
Political Risk
The financial risk associated with changes in government policy, political instability, or geopolitical events that can affect the profits or assets of businesses.
Economic Impact
The effect of an event, policy, or market change on the economy, which may include changes in employment, GDP, and consumer spending.
USMCA
United States-Mexico-Canada Agreement, a trade deal that replaced NAFTA to support mutually beneficial trade among the three countries.
- Evaluate the potential hazards tied to global investment and economic treaties.
Verified Answer
AB
Alicia Bruce-RomoJun 10, 2024
Final Answer :
A
Explanation :
Political risk refers to the uncertainty and potential financial loss businesses and investors face due to changes in the political environment or government policies. The failure of the USMCA to be ratified by Congress, leading to negative economic impacts, is a direct consequence of political decisions and actions, thus exemplifying political risk.
Learning Objectives
- Evaluate the potential hazards tied to global investment and economic treaties.