Th4.3: International Monetary Fund (IMF)

Question 1

What is the goal of the international monetary fund?

Answer 1

to ensure that the exchange rate systems work well

Question 2

How does the IMF do this?

Answer 2

they provide loans to help countries when there are international exchange rate crises or when they cannot afford to pay off their international debt

Question 3

When providing loans, the IMF insists that countries make macroeconomic reforms to resolve the problems - what are the possible complaints about this?

Answer 3

it usually involves reducing imports and increasing exports which reduces the amount of resources available for domestic consumption. it can also be in the form of lower government spending

Question 4

Although countries aren’t forced to turn to the IMF, why do many do?

Answer 4

because the alternative is defaulting on their loans, which would cause even more problems than reforms usually do

Question 5

What do the reforms intend to do?

Answer 5

intend to help countries to overcome issues and should allow a country to develop in the long term - not meant to be a punishment

Question 6

The IMF also provides advice which aims to…

Answer 6

bring about economic stability and raise living standards and help countries to develop their economic institutions through training and technical assistance