Discuss why the World Bank has been criticized for making loans to nations that can attract private funds
What will be an ideal response?
Loans given to nations that can attract private funds interfere with the private market for capital goods. This can encourage inefficient investment in projects that should not be undertaken.
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Middlemen have a comparative advantage in
A) lowering transaction costs. B) raising transaction costs. C) robbery and theft. D) tax evasion. E) buying products at a high price and selling them at a lower price.
During the "computer revolution" of the 1980s and 1990s, many firms replaced old technology with new technology. What might explain why firms don't change technology as quickly today?
What will be an ideal response?
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and monetary base in the context of the Three-Sector-Model? a. The real risk-free interest rate falls and monetary base falls
b. The real risk-free interest rate rises and monetary base falls. c. The real risk-free interest rate and monetary base remain the same. d. There is not enough information to determine what happens to these two macroeconomic variables.
There is zero crowding out and the federal budget is balanced at the time government purchases are increased. It follows that the __________ curve shifts to the __________, and in the short run both the price level and Real GDP __________
A) AD; left; rise B) AD; right; fall C) AD; right; rise D) AD; left; fall E) SRAS; right; rise