The IMF Offers Loans to Developing Countries in Times of Balance

question 115

Multiple Choice

The IMF offers loans to developing countries in times of balance of payment constraints, but the IMF also faces strong criticisms because:

• A)it employs economists that know little about developing countries and their economic affairs.
• B)the conditions tend to be procyclical, therefore worsening the recessions.
• C)contractionary fiscal and monetary policies are always undesirable for any developing country.
• D)contractionary fiscal policy and expansionary monetary policy tend to be ineffective against balance of payment constraints.

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Definitions:

Techniques of Production

The methods and processes used in the transformation of inputs into outputs by firms in the production of goods and services.

Price of Output

The amount of money that a producer receives for selling one unit of a product or service in the market.

Price of Inputs

The cost of resources used in the production of goods and services, including materials, labor, and overheads.

Sunk Cost

Expenses that have already been incurred and cannot be recovered, and should not affect future economic decisions.