true or false One of the key functions of the International Monetary Fund (IMF)
ID: 2440568 • Letter: T
Question
true or false
One of the key functions of the International Monetary Fund (IMF) is to manage and regulate the flow of international trade.
Comparisons of real income or material well-being across countries are difficult because countries have very different prices and economic structures. Market Exchange Rates (FX) provides a more accurate comparison than does Purchasing Power Parity (PPP).
The “varieties of capitalism” point of view predicts a more complex process of dual convergence because globalization creates a variety of common pressures to which competing models of capitalism are differently exposed.
It is indisputable that the processes of globalization have made the autonomy, capacity, and sovereignty of the state disappear.
The probability of financial crisis increases when governments limit capital mobility and information becomes more accessible to all market participants.
Economists noted that national governments face an inevitable trade-off between the three policy goals of exchange rate stability, national monetary policy autonomy, and capital mobility. According to the “impossible trinity”, it is only possible for governments to realize one of the three goals at the same time.
Explanation / Answer
One of the key functions of the International Monetary Fund (IMF) is to manage and regulate the flow of international trade.
IMF does not deal with flow of international trade. WTO deals with international trade matters. IMF concerns deal financial stabilities.
Hence, this is false statement.
Comparisons of real income or material well-being across countries are difficult because countries have very different prices and economic structures. Market Exchange Rates (FX) provides a more accurate comparison than does Purchasing Power Parity (PPP).
This is false statement:
PPP is used to compare living standards of people across the world.
The “varieties of capitalism” point of view predicts a more complex process of dual convergence because globalization creates a variety of common pressures to which competing models of capitalism are differently exposed.
This is true statement:
Developed and developing countries would move towards the convergence over the period of time.
It is indisputable that the processes of globalization have made the autonomy, capacity, and sovereignty of the state disappear.
This is true statement:
Economies of world do not have control over the economic incidents. And these incidents affect social and political system of these economies. Hence, autonomy and sovereignty of states are declining.
The probability of financial crisis increases when governments limit capital mobility and information becomes more accessible to all market participants.
Limiting capital mobility reduces the probability of financial crisis. Movements of capital across the frontiers cause financial crisis.
Hence, this is False statement.
Economists noted that national governments face an inevitable trade-off between the three policy goals of exchange rate stability, national monetary policy autonomy, and capital mobility. According to the “impossible trinity”, it is only possible for governments to realize one of the three goals at the same time.
Government can achieve two goal simultaneously by sacrificing one goal.
This is false statement .
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