Skip to content

CFA Level I · CFA Level I Exam · Introduction to Geopolitics

Country X, a large importer of energy, signs long-term supply contracts with several different exporters rather than relying on one. This behavior is most likely intended to:

Diversifying energy suppliers is most likely intended to reduce vulnerability to supply disruption and to political leverage by any single exporter. It serves resource security, a core national objective, even if the average cost is somewhat higher than relying on the cheapest source.

  1. Areduce vulnerability to supply disruption and political leverage by a single exporterCorrect
  2. Bmaximize the volume of domestic energy exports to earn foreign currency
  3. Cincrease dependence on the lowest-cost exporter to cut costs in the short run

Explanation

Diversifying suppliers lowers exposure to disruption and to coercion by one exporter, a security and economic-resilience objective. Concentrating on the cheapest exporter would raise dependence, the opposite of the action described, and Country X is an importer, so maximizing exports is irrelevant.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Geopolitics shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to GeopoliticsFree diagnostic mock

More Introduction to Geopolitics questions