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.


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