Question

Cuba is one of the world's leading producers of sugarcane. Consequently, sugar is its main export. Why is this a potential problem?
Many other countries in Latin America, such as Brazil, are also top global producers of sugarcane.

A sudden drop in sugar prices or in production caused by a natural disaster could cripple Cuba's economy.

Many Latin American countries have unstable governments and economies.

World sugar consumption is expected to drop sharply in a few years, as people become more health-conscious.

Answer 1

A sudden drop in sugar prices or in prices or in production caused by a natural disaster could cripple Cuba's economy.

Answer 2

The correct answer is - A sudden drop in sugar prices or in production caused by a natural disaster could cripple Cuba's economy.

Being heavily reliant on one product is always a very tricky situation for the economy of a country, and in the case of Cuba, the big reliance on sugar cane exports, can easily cripple the country's economy.

When the prices of the sugar drop, or there are natural disasters that destroyed big portion of the plants (which is common in the Caribbean region), the economy immediately suffers. All of the people in the country are affected, as big portion of them are working in that industry, so when they lack money, there's not enough money for circulation in the economy. That will result in bigger amount of money to be let in circulation, but that will result in high inflation.