Which of the Following Is Not a Potential Problem for Emerging

Multiple Choice

Which of the following is not a potential problem for emerging economies which liberalize their capital accounts to allow funds to flow in from developed countries?

A) Asymmetric information can cause funds to be directed into unprofitable sectors
B) A sudden withdrawal of foreign funds could create a recession
C) A weak banking sector can generate excessive risk taking as funds flow in
D) The inflows may be volatile and thus unpredictable
E) Investment could exceed the level of domestic saving