Purchase Solution

Policies & Prospects

Not what you're looking for?

Ask Custom Question

For each of the following situations explain which of the policy issues is associated with stance the institution has taken.

A)The IMF extends a long-term loan to a nations government to help it maintain publicly supported production of goods and services that the government otherwise would have turned over to private companies.

Moral hazard
Adverse selection
Making loans that would be otherwise funded in the private market
High level of corruption makes loans have little chance of success

B) the world bank makes a loan to companies in an impoverished nation in which government officials typically demand bribes equal to 50% of companies' profits before allowing them to engage in any new investment project.

Moral hazard
Adverse selection
Making loans that would be otherwise funded in the private market
High level of corruption makes loans have little chance of success

C)The IMF offers to make a loan to banks in a country in which the government's rulers commonly require banks to extend credit to finance high risk investment projects headed by the rulers' friends & relatives.

Moral hazard
Adverse selection
Making loans that would be otherwise funded in the private market
High level of corruption makes loans have little chance of success

Purchase this Solution

Solution Summary

The IMF extends for a long-term loan to a nations government to help it maintain publicly supported productions of goods and services that the government otherwise would have turned over to private companies are determined.

Solution Preview

A. These loans would otherwise have been funded in a private market.

B. This situation involves adverse selection. When bribes are required, only ...

Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.