The Major Function of the World Bank Is to Serve

question 45

Multiple Choice

The major function of the World Bank is to serve as

• A) a nonprofit banking cooperative for its members to meet development needs.
• B) a central bank for the world's central bankers.
• C) a nonprofit cooperative to finance the educational needs of its members.
• D) an investment in funds in global businesses to create value for its shareholders.

Understand the impact of fiscal policy and automatic stabilizers on the economy.

Distinguish between recessionary and inflationary gaps and their implications.

Comprehend the role and effects of government spending and taxation in fiscal policy.

Recognize the historical context and evolution of fiscal policy and national debt.

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Definitions:

Lost Surplus

Refers to the reduction in the combined consumer and producer surplus, often caused by inefficiencies in a market, such as taxes, tariffs, or other forms of market intervention.

Market Failure

A situation in which market forces, such as supply and demand, fail to allocate resources efficiently, often justifying government intervention.

Pareto Efficiency

A situation where resources are distributed in such a way that improving the condition of any one individual or meeting a preference more fully would result in detriment to at least one other individual or preference.

Socially Efficient

A situation where resources are allocated in the most effective manner, maximizing overall social welfare.