The International Monetary Fund was created during the Bretton Woods system in order to
A) oversee the fixed exchange rate policy.
B) lend money for long-term development projects.
C) regulate global financial flows.
D) lend money for a country's short-term imbalances.

Question

Quizplus · Accepted Answer

The International Monetary Fund (IMF) was created during the Bretton Woods system to provide short-term financing to countries facing balance of payments difficulties, which could arise from any combination of factors such as an unfavorable trade balance, declining reserves, and/or a large and sudden outward flow of capital. Therefore, the best choice is D, which states that the IMF was created to lend money for a country's short-term imbalances. The other choices are not entirely accurate. Although the IMF does oversee exchange rate policies and regulate financial flows, these functions are not its primary purpose. Likewise, while the IMF may provide long-term development financing for certain projects, this is not its main mandate.

The International Monetary Fund Was Created During the Bretton Woods