Chapter 23: The World Bank
MULTIPLE CHOICE
1. Which of the following is not one of the purposes of the World Bank?
a. To provide loans to help with reconstruction and development of countries.
b. To promote private foreign investment.
c. To administer balance of payments arrangements.
d. To promote the growth of international trade.
2. Which of the following is not a source of funds for the International Bank for
Reconstruction and Development (IBRD)?
a. Contributions from the United Nations.
b. Subscriptions from members.
c. Bond issues.
d. Loan repayments.
3. Which of the following is not a component of the World Bank Group?
a. The International Development Association (IDA).
b. The Standby Loan Facility (SLF).
c. The Multilateral Investment Guarantee Agency (MIGA).
d. The International Finance Corporation (IFC).
4. Which of the following is not a purpose of the International Development Association
(IDA)?
a. To promote economic development.
b. To raise living standards.
c. To make loans on concessional terms to select developing countries.
d. To provide short-term loans to compensate for commodity export losses.
5. Which of the following is not a typical condition of an International Development
Association (IDA) loan?
a. A zero interest rate.
b. A ten-year grace period.
c. Short-term repayment periods.
d. None of the above.
6. Which of the following is not a function of MIGA?
a. The provision of political risk insurance.
b. Taking equity positions in private sector development.
c. Investment marketing.
d. The provision of legal services to support foreign direct investment (FDI).
7. Which of the following was the earliest lending phase of the World Bank?
a. Infrastructure project lending.
b. Policy-based lending.
c. Poverty alleviation lending.
d. Structural adjustment lending.
8. Which of the following was not an aspect of policy-based lending phase of the World
Bank?
a. Macro-level conditionality.
b. Short-term focus.
c. Integrated rural development.
d. Structural adjustment lending.
9. Which of the following is an element of the Washington Consensus?
a. Environmental regulation.
b. Tax reform.
c. Project lending.
d. Urban development.
10. Which of the following is not an element of the Washington Consensus?
a. Fiscal discipline.
b. Financial and interest rate liberalization.
c. Privatization.
d. Social inclusion policies.
TRUE/FALSE
1. Only countries that are members of the International Monetary Fund can join the World
Bank.
2. The most important source of funds for the International Bank for Reconstruction and
Development (IBRD) is members’ subscriptions.
3. The Board of Governors of the World Bank is responsible for its day-to-day
management.
4. In its earliest years, the World Bank devoted most of its lending to social sector projects
in education, health and rural development.
5. The policy-based lending phase of the World Bank was largely a continuation of its
poverty-alleviation phase.
6. A major criticism of the Washington Consensus is that it has not been effective in
reducing poverty.
7. Structural adjustment lending is associated with the project-based lending phase of the
World Bank.
8. John Williamson, the founder of the Washington Consensus notion, is in agreement with
“market fundamentalism.”
9. World Bank President Paul Wolfensohn introduced the Comprehensive Development
Framework into the World Bank.
10. After the financial crisis of 2007-2009, the World Bank’s lending portfolio shifted
towards middle-income countries.
SHORT ANSWER
1. What is the function of the World Bank’s International Finance Corporation (IFC)?
2. What is the purpose of the World Bank’s International Development Association (IDA)?
3. What is the role of the International Center for Settlement of Investment Disputes
(ICSID)?
4. What is the role of the Multilateral Investment Guarantee Agency (MIGA)?
5. What types of lending did the World Bank focus on in its earliest years? What was the
rationale for this type of lending?
6. What were the characteristics of the World Bank’s poverty lending phase?
7. Why has the Washington Consensus drawn so much criticism?
8. Which elements of the Washington Consensus have been criticized for contributing to
financial instability?
9. What were the concerns about the World Bank’s structural adjustment lending programs?
10. How did President Wolfensohn’s Comprehensive Development Framework address some
of the problems stemming from the previous structural adjustment approach?