What is one of the main functions of the International Monetary Fund (IMF)?

Prepare for the HSC Economics Exam with comprehensive study materials, including flashcards and multiple choice questions. Each question offers hints and detailed explanations to boost your confidence and help you ace your exam!

The primary function of the International Monetary Fund (IMF) is to promote international monetary cooperation and ensure the stability of the global monetary system. This includes overseeing the stability of exchange rates and facilitating the orderly adjustment of these rates among its member countries. The IMF provides a framework for international financial cooperation and helps countries avoid financial crises by offering advice, financial assistance, and technical support. Ensuring stable exchange rates is crucial, as volatility in exchange rates can lead to economic instability and hinder international trade and investment.

In contrast, enforcing international security agreements relates to maintaining peace and security on a global scale, which falls outside the IMF's mandate. Providing humanitarian aid to developing countries involves addressing social welfare issues, which is typically the domain of organizations like the United Nations or various NGOs, rather than an economic institution like the IMF. Lastly, while the IMF does play a role in advising on economic policy, it does not manage global trade tariffs, as these are generally the responsibility of the World Trade Organization (WTO) and individual countries. Thus, the correct answer highlights the IMF's key role in maintaining exchange rate stability, which is vital for a functioning global economy.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy