Question

Do you think the standard IMF policy prescription of tight monetary policy and reduced government spending are always appropriate for developing nations experiencing a currency crisis? How might the IMF change its approach? What would the implications be for international businesses? Please give your response in essay format by creating a document. Your response should be double-spaced and at least two page long not including headings and references, 12-point Times New Roman Fonts, 1-inch margins all the way around. Make sure to list any reference, even the textbook. Do not retype the question itself. Just write your essay. Please write all your references in mla format!!!!!!!!!!!!!!!!!!!!

Answer 1

Some critics claim that the tight macroeconomic strategies employed by the IMF in the Asian crisis aren’t apt for nations which are suffering not from excessive governmental expenditure & inflation, but rather from a private sector debt problem with inflationary undercurrents. Monetary strategies which are anti-inflationary & cutting of governmental spending normally outcome in a sharp shrinkage of demand, at least in the short-term. In the long-run , the strategies can foster economic growth & demand, which builds prospects for international business.

IMF has altered its approach by concentrating on lending funds to nations in financial problems. It fundamentally incorporates 3 chief crises - currency crisis, foreign debt crisis, banking crisis. Some opponents state that the ‘1-size-fits-each one’ attitude to macroeconomic strategy is inapt for most nations. Also, it is aggravating moral hazards. In this manner, it has become an exceedingly powerful establishment minus any actual mechanism for answerability. Currently, it has started to modify its strategies & has become more flexible.

It appears that it could be very rigid for international business. Preferably, global managers should grasp how the international monetary mechanism impacts business operations. One more application is that it assists to function business strategy where it should be comprehended with how exchange rate movements can have a big effect on the business’ competitive advantage .