Which of the following is a source of economic risk in many countries?

• A. Consistent monetary policy
• B. High levels of infrastructure investment
• C. Stable legal systems
• D. Political instability

Answer: (D)

Verified step by step guidance

1. Understand the concept of economic risk: Economic risk refers to the possibility that economic conditions or policies in a country will negatively affect business operations or investment returns.
2. Identify common sources of economic risk: These often include factors such as political instability, inconsistent monetary policy, poor infrastructure, and unstable legal systems.
3. Analyze each option given: Consistent monetary policy, high levels of infrastructure investment, and stable legal systems generally reduce economic risk by providing a predictable and supportive environment for economic activity.
4. Recognize that political instability creates uncertainty and unpredictability in economic policies and governance, which can disrupt markets, investment, and economic growth.
5. Conclude that among the options, political instability is a key source of economic risk in many countries because it undermines confidence and stability necessary for economic development.