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- Discuss the following statement: “It’s true that running a current account deficit for a developing country is a bad thing”Describe three means by which a current account deficit in a developing country is financed. (By "financed," I mean "paid for," "covered" or "balanced" in accounting terms. "Increase exports" or "decrease imports" are not correct answers since they refer to future actions a country may take, not to how a current account deficit is balanced/financed today.)Explain the relationship between a current account deficit or surplus and the flow of funds.
- The primary purpose of the International Monetary Fund is to exchange one currency for another. lend foreign currency to member countries. consolidate the debt facing developing nations. collect the interest on loans made by the World Bank.Are current account deficits necessarily undesirable? Provide a brief justification.We often hear that trade deficits are bad for a country. Should we agree or disagree with this viewpoint?
- What is more important, a country’s current account balance or GDP growth? Why?Situation: Imagine that you are the new director of a major international lending institution that gets its funding from member countries. You are evaluating your organization’s lending policies and priorities. What one aspect of people’s lives would you prioritize for receiving aid in developing economies?The IMF has a goal of promoting global economic growth and financial stability, encourage international trade and reduce poverty. True or false