Developments in a national economy can affect the outcome of an international financial transaction. What this process is called ?
Correct answer: B. Country economic risk
- A. International economic risk
- B. Country economic risk
- C. Ultra-country economic risk
- D. Outcome risk
Explanation
Country economic risk is the possibility that changes in a nation’s economy, such as recession, inflation, or exchange-rate instability, will affect an international transaction. It is broader than a risk tied only to the transaction’s outcome.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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