2 Questions Needed to be Ansewered Assignment Example | Topics and Well Written Essays - 500 words

2 Questions Needed to be Ansewered - Assignment Example Firstly, they encourage countries to tighten money supply and reduce fiscal stimulus (Friedman 4). Secondly, they advocate privatization of public enterprises (Friedman Web). They also advocates for liberal, free market economy. These institutions also force countries to adopt tax rate that prevail in other countries. They also demands countries to maintain their deficit to GDP ratio to international standards. In addition, they allow the removal of restrictions on the flow of international capital and the removal of barriers to trade (Quiggin 5). Countries are also required to maintain zero tolerance to corruption. In fact, after the 1980’s debt crisis, the IMF required the government to cut public expenditure, sell or close public institution operating at a loss followed by removal of regulatory policies (Quiggin 32). Several benefits exist to countries that follow the Golden Straightjacket. The first benefit is the increased acceleration of the economy and decreased political interference (Friedman 4). The Golden Straightjacket fosters more growth and higher average income (Friedman 4). This happens through increased trading activities, foreign investments, privatization and efficiency in resources used due to the pressure of global competition (Friedman 4). On the political front, the political and economic choices of those in power are limited by the global economic standards (Friedman 4). In fact, the government control on the economy minimizes as it adopts more policies that are liberal. This means the degrees of freedom on fiscal policies are limited (Friedman 101-111). On the other hand, some countries are against the Golden Straightjacket. Consequently, there is a consequence to such countries. Firstly, there is decreased investment. Secondly, there is reduced spending or withdrawing of m oney from such countries. Moreover, such countries are required to pay higher interest rates to borrow from foreign institutions (Chaudhry