For each of the given situations describe which of the policy issues is associated with stance the institution has taken.
1) 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
2) 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
3) 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