Question

In the mid-2000s both Azerbaijan and the United States had large natural gas production booms. Azerbaijan's production boom in natural gas was due to its development of natural gas fields in the Caspian Sea and its construction of the South Caucasus Pipeline, while the U.S. production boom was attributed to new horizontal drilling technology called fracking. Questions: 1) Which country's exchange rate would most likely be impacted by the natural gas production boom? (State the reasons for your answer) 2) Which country would most likely suffer from the Dutch Disease? (State the reasons for your answer) Your response must be at least two paragraphs. In addition, it is required to reply to at least two other students' posts by offering respectful suggestions, comments, or critiques related to the subject matter and their post.

Answer 1

It will is Azerbaijan whose exchange rate would be impacted.The reason is that it is a small country with little exports.exports of natural gas will form significant proportion of output and will thus have effect on exchange rate.on the other hand USA is big economy with large no. Of exports.Thus its currency will not be impacted much

2 Again Dutch disease will affect Azerbaijan .The reason is since it's currency will appreciate much it's non gas exports will fall.Thus sectors others than gas will see less demand .