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.

Question

Quizplus · Accepted Answer

The IMF often faces criticism for imposing conditions on loans that are procyclical, meaning they can exacerbate economic downturns by requiring austerity measures that reduce spending and investment during a recession.

The IMF Offers Loans to Developing Countries in Times of Balance