The IMF offers loans to developing countries in times of balance of payment constraints, but the IMF also faces strong criticisms because:
A)the IMF has 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's conditions often require austerity measures, which can be procyclical, exacerbating economic downturns by reducing government spending and increasing taxes during recessions.

The IMF Offers Loans to Developing Countries in Times of Balance