Last year, Gambia received $5 billion in loans from the International Third World Banking Fund (ITWBF), and its Gross National Product (GNP) grew by 5%. This year Gambia has requested twice as much money from the ITWBF, and its leaders expect that Gambia’s GNP will rise by a full 10%. Which of the following, if true, would undermine the expectations of Gambia’s leaders? The large 5% increase of last year is attributable to extraordinary harvests due to unusually good weather conditions. Gambia’s economy is not strong enough to absorb more than $3 billion in outside capital each year. There is no linear relationship between aid and growth.
Solution
Correct Answer: Option E
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