Countries that require substantial loans from the International Monetary Fund to survive will ________ due to IMF-mandated economic policies.
A) benefit from a sharp expansion of demand in the long term
B) endure a sharp contraction of demand in the long term
C) benefit from a sharp expansion of demand in the short term
D) endure a sharp contraction of demand in the short term

Question

Quizplus · Accepted Answer

Increasingly, the IMF has been acting as the macroeconomic police of the world economy, insisting that countries seeking significant borrowings adopt IMF-mandated macroeconomic policies. These policies typically include anti-inflationary monetary policies and reductions in government spending. In the short run, such policies usually result in a sharp contraction of demand.

Countries That Require Substantial Loans from the International Monetary Fund