Most economists agree that an international trade agreement that was recently signed will strengthen the economies of those countries participating in it. This benefit is expected to be noticeable even in the short term. Nevertheless, despite the fact that the number of business bankruptcies generally declines in a country when its economic performance improves, these same economists expect that countries participating in the agreement will experience an increase in business bankruptcies shortly after it takes effect.
Which of the following, if true, most helps to justify the economists’ expectation about business bankruptcies?