If a country's exports become more diversified across products and markets, its economy is generally:
Correct answer: B. Less vulnerable to a single external shock
- A. More exposed to one commodity shock
- B. Less vulnerable to a single external shock
- C. Unable to earn foreign exchange
- D. Automatically free from trade deficits
Explanation
Diversification spreads export earnings across several products and destinations, reducing dependence on one commodity or market. It does not automatically prevent a trade deficit or guarantee immunity from every external shock.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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