In the mid-2000s both Australia and the United States had large natural resource production booms. Australia began to markedly increase its mining and exporting of iron ore, coal, and natural gas after large increases in commodity prices in the mid-2000s. The U.S. production boom in natural gas 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.
