Questions: Which of the following is a characteristic of the economic model used to explain the Dutch Disease? The economy has two sectors, a booming one and a lagging one. The economy has three sectors; two sectors are booming, and one sector is lagging. The economy has the nontraded goods sector, which is booming, and two lagging traded goods sectors. The economy has two traded goods sectors, one booming and the other lagging, and the nontraded goods s.

The answer is the fourth one: The economy has two traded goods sectors, one booming and the other lagging, and the nontraded goods sector.

Explanation for each option:

1. The economy has two sectors, a booming one and a lagging one.

   • This option is partially correct but lacks the inclusion of the nontraded goods sector, which is a crucial part of the Dutch Disease model. The model typically involves a booming sector (often natural resources) and a lagging sector, but it also includes the nontraded goods sector.

2. The economy has three sectors; two sectors are booming, and one sector is lagging.

   • This option is incorrect because the Dutch Disease model usually involves one booming sector and one lagging sector, not two booming sectors.

3. The economy has the nontraded goods sector, which is booming, and two lagging traded goods sectors.

   • This option is incorrect because, in the Dutch Disease model, it is typically one of the traded goods sectors that is booming, not the nontraded goods sector.

4. The economy has two traded goods sectors, one booming and the other lagging, and the nontraded goods sector.

   • This option correctly describes the structure of the Dutch Disease model. The model involves a booming traded goods sector (often due to a natural resource discovery), a lagging traded goods sector, and a nontraded goods sector that can be affected by the changes in the economy.

In summary, the Dutch Disease model is characterized by a booming traded goods sector, a lagging traded goods sector, and a nontraded goods sector, as described in the fourth option.