Explanation:

• A British economist named John Williamson coined the term Washington Consensus in 1989
• The Washington Consensus refers to a set of free-market economic policies supported by prominent financial institutions such as the International Monetary Fund, the World Bank, and the U.S.Treasury.
• The ideas were intended to help developing countries that faced economic crises.In summary, The Washington Consensus recommended structural reforms that increased the role of market forces in exchange for immediate financial help.
• These are the ten specific principles originally set out in the consensus:

1. Low government borrowing :The idea was to discourage developing economies from having high fiscal deficits relative to their GDP.
2. Diversion of public spending from subsidies to important long-term growth supporting sectors like primary education, primary healthcare, and infrastructure.
3. Implementing tax reform policies to broaden the tax base and adopt moderate marginal tax rates.Hence, option 3 is not correct.
4. Selecting interest rates that are determined by the market.These interest rates should be positive after taking inflation into account (real interest rate).
5. Encouraging competitive exchange rates through freely-floating currency exchange.Hence option 2 is correct.
6. Adoption of free trade policies.This would result in the liberalization of imports, removing trade barriers such as tariffs and quotas.
7. Relaxing rules on foreign direct investment.
8. Privatization of state enterprises.Typically, in developing countries, these industries include railway, oil, and gas.Hence option 1 is correct.
9. The eradication of regulations and policies that restrict competition or add unnecessary barriers to entry.
10.  Development of property rights.

• These policies were applied for more than two decades in such diverse contexts as Africa, Latin America and Asia, as well as in countries emerging from real socialism in Eastern Europe and Central Asia.
• There were usually two major stages of intervention: o the first focused on macroeconomic stability and structural adjustment programs, and o the second included such objectives as improving institutions, reducing corruption or dealing with infrastructure inefficiency.
• The conditionality exercised by the Bretton Woods institutions and wealthy countries played a crucial role in indebted countries’ decisions to push through macroeconomic stabilization reforms and structural adjustment programs.