Which of the following factors in a country is most likely to cause political risk for an international business?

Question

A. The presence of more than one ethnic nationality

B. Infrequent changes in government and government policy

C. Low inflation rate

D. Low level of government debt

E. High living standards

Answer 1

A
Political risk tends to be greater in countries experiencing social unrest and disorder or in countries where the underlying nature of a society increases the likelihood of social unrest. Social unrest typically finds expression in strikes, demonstrations, terrorism, and violent conflict. Such unrest is more likely to be found in countries that contain more than one ethnic nationality.