Assume that the country of Mongolia recently discovered vast deposits of tungsten within its borders and plans to
“Assume that the country of Mongolia recently discovered vast deposits of tungsten within its borders and plans to
grant licenses to foreign mining companies to extract and refine the tungsten. In addition to a large license fee, the Mongolian government also collects a royalty from the sale of each ton of tungsten, which is mostly sold to the foreign mining companies. The mining companies are from Norway and the United States. There is a boom in foreign investment, and much tungsten is extracted from Mongolia, leading to an instance of Dutch Disease in Mongolia. Which of the following properly identifies the group or groups most likely to benefit and become disadvantaged due to any changes that may occur in the value(s) of the currency(ies) described?”
| A. | Mongolian importers benefit because they can more easily afford goods from Norway and the United States |
| B. | Mongolian importers are disadvantaged because it is now more expensive for them to buy products from the United States or Norway |
| C. | Other Mongolian exporters to the United States and Norway (those not involved in tungsten) are disadvantaged because their products become more expensive for US and Norwegian customers |
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