Why are there conflicts of interest involved in international finance?Group of answer choicesBorrowing countries frequently refuse to pay their debts.A flood of international capital reduces the domestic savings rate.Borrowers and lenders disagree over how the benefits from loans and investments should be divided.The International Monetary Fund is reluctant to manage the problems of heavily indebted countries.

Conflicts of interest in international finance can arise due to several reasons:

1. Borrowing countries frequently refuse to pay their debts: This can create a conflict of interest as the lending countries or institutions want to ensure their loans are repaid, while the borrowing countries may be unable or unwilling to do so. This can lead to disputes and tension between countries.

2. A flood of international capital reduces the domestic savings rate: When a country receives a large amount of foreign investment, it can lead to a decrease in the domestic savings rate. This is because the influx of foreign capital can lead to increased consumption and decreased savings. This can create a conflict of interest between foreign investors and domestic savers.

3. Borrowers and lenders disagree over how the benefits from loans and investments should be divided: This is a common source of conflict in international finance. Borrowers may feel that they are not receiving a fair share of the benefits from a loan or investment, while lenders may feel that they are not receiving adequate returns on their investment. This can lead to disputes and conflicts.

4. The International Monetary Fund is reluctant to manage the problems of heavily indebted countries: The IMF is often called upon to help manage the debt problems of countries. However, the IMF may be reluctant to do so due to the risk involved. This can create a conflict of interest between the IMF and the indebted countries.