The World Bank obtains the funds it lends by: a. selling bonds ...

[saraeharris]

The World Bank obtains the funds it lends by:
 a. selling bonds on the international bond market.
  b. selling bonds to countries it has loaned funds to.
  c. collecting each country's annual membership fee or quota.
  d. levying a small tax on every foreign exchange conversion worldwide.
  e. depending on voluntary subsidies from member nations.

Question 2

How do subsidies distort trade patterns and lead to inefficiencies?

[Kdiggy]

Answer to Question 1

a

Answer to Question 2

With subsidies, producers will export goods not because their costs are lower than those of a foreign competitor but because their costs have been artificially reduced by government action, transferring income from taxpayers to the exporter. The subsidy does not reduce the amounts of actual labor, raw material, and capital costs of productionsociety has the same opportunity costs as before. The nation's taxpayers end up subsidizing the output of producers who, relative to producers in other countries, are inefficient.