How the IMF Could Have Helped

This has been the story of how a lack of foreign exchange can prevent international trade. What began as a simple problem -- the desire to import cellular phones -- turned into a major political and economic crisis.

As the Economics Minister of the mythical country of Yak, you learned how to increase exports in order to bring more foreign exchange into the country. In the end, more international trade between Yak and its neighboring countries contributed to a healthy economy for all the trading partners.

In the real world, there exists an organization that helps member countries that are in need of foreign exchange. It is the IMF. The IMF works to help countries get back on track when they have problems with the supply of foreign exchange. The IMF works to make currency exchange easy and predictable by lending countries needed foreign exchange and helping those countries reform their economics.

If Yak and its trading partners had an organization like the IMF, this story would have been quite short. You, as the cell phone dealer, would have gone to the bank, exchanged some of your money for foreign currency, which would be available through the assistance of the IMF, and purchased the imported cell phones that your customers wanted. Not very dramatic, but that's how the IMF would like it to be.

THE END

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