A surge in international bank lending could be potentially economically destabilizing because
A) it creates the possibility of reduced control of a country's money supply.
B) it directly contributes to destabilizing real investment flows.
C) it results in too much control of world investment by a few large industrial countries.
D) it results in inefficient use of financial capital, and hence reduces world growth rates.

Question

Quizplus · Accepted Answer

A surge in international bank lending means that a country may have reduced control over its money supply, as it may be dependent on foreign banks for funding. This can result in currency fluctuations and potential economic instability.

A Surge in International Bank Lending Could Be Potentially Economically