ADMICRO

Read the following passage and choose the best answer (A, B, C, D):
The International Monetary Fund (IMF) is an organization of 189 member countries.  It stabilizes the global economy in three ways. First, it monitors global conditions and identifies risks. Second, it advises its members on how to improve their economies. Third, it provides technical assistance and short-term loans to prevent financial crises. The IMF’s goal is to prevent these disasters by guiding its members. These countries are willing to give up some of their sovereign authority to achieve that aim.  The IMF has the rare ability to look into and review the economies of all its member countries. As a result, it has its finger on the pulse of the global economy better than any other organization. The IMF produces a wealth of analytical reports. It provides the World Economic Outlook, the Global Financial Stability Report, and the Fiscal Monitor each year. It also delves into regional and country-specific assessments. It uses this information to determine which countries need to improve their policies. Hence, the IMF can identify which countries threaten global stability. The member countries have agreed to listen to the IMF’s recommendations because they want to improve their economies and remove these threats.  Since the Mexican peso crisis of 1994–95 and the Asian crisis of 1997–98, the IMF has taken a more active role to help countries prevent financial crises. It develops standards that its members should follow. For example, members agree to provide adequate foreign exchange reserves in good times. That helps them increase spending to boost their economies during recessions. The IMF reports on members countries’ observance of these standards. It also issues member country reports that investors use to make well-informed decisions. That improves the functioning of financial markets. The IMF also encourages sustained growth and high living standards, which is the best way to reduce members’ vulnerability to crises.  The IMF provides loans to help its members tackle balance of payments problems, stabilize their economies, and restore sustainable growth. Because the Fund lends money, it’s often confused with the World Bank. The World Bank lends money to developing countries for specific projects that will fight poverty. Unlike the World Bank and other development agencies, the IMF does not finance projects. Traditionally, most IMF borrowers were developing countries. They had limited access to international capital markets due to their economic difficulties. An IMF loan signals that a country’s economic policies are on the right track. That reassures investors and acts as a catalyst for attracting funds from other sources. All that shifted in 2010 when the Eurozone crisis prompted the IMF to provide short-term loans to bail out Greece. That was within the IMF’s charter because it prevented a global economic crisis.  The role of the IMF has increased since the onset of the 2008 global financial crisis. In fact, an IMF surveillance report warned about the economic crisis but was ignored. As a result, the IMF has been called upon more and more to provide global economic surveillance. It’s in the best position to do so because it requires members to subject their economic policies to IMF scrutiny. Member countries are also committed to pursuing policies that are conducive to reasonable price stability, and they agree to avoid manipulating exchange rates for unfair competitive advantage.
3. What can be inferred from paragraph 2?

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