Question 1

An example of direct foreign investment is

Accepted Answer

A) a U.S.bank granting a loan to a Guatemalan firm. 
B) General Motors building an auto production facility in China. 
C) a U.S.government foreign aid grant to Bangladesh. 
D) the purchase of debt issued by the Panamanian government. 
A) a U.S.bank granting a loan to a Guatemalan firm. 
B) General Motors building an auto production facility in China. 
C) a U.S.government foreign aid grant to Bangladesh. 
D) the purchase of debt issued by the Panamanian government.

Question 2

The two paths to economic development, which are the same for both developing countries and industrially advanced economies, are

Accepted Answer

A) use existing resources more efficiently and expand the available resources. 
B) expand the government sector and preserve all available resources. 
C) enhance regulation and taxation, and redistribute income to reduce income disparity. 
D) expand the money supply and eliminate budget deficits. 
A) use existing resources more efficiently and expand the available resources. 
B) expand the government sector and preserve all available resources. 
C) enhance regulation and taxation, and redistribute income to reduce income disparity. 
D) expand the money supply and eliminate budget deficits.

Question 3

Japan is a nation that achieved a high standard of living despite having a very limited supply of natural resources.

Accepted Answer

A) True 
 B)False

Question 4

The richest 20 percent of the world's population receives more than 75 percent of the world's income, while the poorest 20 percent receives less than 2 percent of the world's income.

Accepted Answer

A) True 
 B)False

Question 5

Over the next 15 years, out of every 10 people added to the world's population will be born in developing countries.

Accepted Answer

A) 6 
B) 7 
C) 8 
D) 9 
A) 6 
B) 7 
C) 8 
D) 9

Question 6

In recent years, many DVCs have come to realize that

Accepted Answer

A) expanded international trade is harmful to DVCs. 
B) private capital investment is essential for economic growth in DVCs. 
C) the International Monetary Fund is the major institutional barrier to economic growth. 
D) government involvement in economic development is the only avenue for economic growth. 
A) expanded international trade is harmful to DVCs. 
B) private capital investment is essential for economic growth in DVCs. 
C) the International Monetary Fund is the major institutional barrier to economic growth. 
D) government involvement in economic development is the only avenue for economic growth.

Question 7

For DVC per capita incomes to rise, birth rates must first be reduced.This statement describes the

Accepted Answer

A) human capital view of population growth. 
B) traditional view of population growth. 
C) capricious universe view. 
D) demographic transition view of population growth. 
A) human capital view of population growth. 
B) traditional view of population growth. 
C) capricious universe view. 
D) demographic transition view of population growth.

Question 8

Microcredit refers to

Accepted Answer

A) small-size stock markets with very limited capitalization. 
B) a system of providing credit to small-business owners. 
C) bond markets for governments of small nations. 
D) deposits in small banks in developing nations. 
A) small-size stock markets with very limited capitalization. 
B) a system of providing credit to small-business owners. 
C) bond markets for governments of small nations. 
D) deposits in small banks in developing nations.

Question 9

One policy recommended by most economists for promoting economic growth in DVCs is the nationalization and protection of domestic industries.

Accepted Answer

A) True 
 B)False

Question 10

A highly active role by government may be needed to promote economic growth in low-income DVCs because of

Accepted Answer

A) a lack of infrastructure. 
B) rigid law enforcement in the country. 
C) excessive local entrepreneurship. 
D) all these reasons. 
A) a lack of infrastructure. 
B) rigid law enforcement in the country. 
C) excessive local entrepreneurship. 
D) all these reasons.

Question 11

The gap in the standards of living between the IACs (like the U.S., countries of Western Europe, and Japan) and the DVCs of Africa, Latin America, and Asia have been narrowing significantly over the decades.

Accepted Answer

A) True 
 B)False

Question 12

One way through which industrially advanced economies can help DVCs is known as "official development assistance (ODA)," or more simply,

Accepted Answer

A) foreign investment. 
B) international capital. 
C) foreign aid. 
D) international trade. 
A) foreign investment. 
B) international capital. 
C) foreign aid. 
D) international trade.

Question 13

Studies generally show that if there is more investment in capital goods in DVCs, there will be greater

Accepted Answer

A) capital flight. 
B) economic growth. 
C) underemployment. 
D) unemployment. 
A) capital flight. 
B) economic growth. 
C) underemployment. 
D) unemployment.

Question 14

The demographic transition view of population and growth in DVCs is that

Accepted Answer

A) the most important factor affecting population growth in DVCs is demographic changes among the elderly. 
B) slower population growth is neither desirable nor productive for DVCs given the state of the economies in these nations. 
C) reduced birth rates must come first in DVCs, and then higher per capita incomes will follow. 
D) higher per capita incomes must come first in DVCs, and then reduced birth rates will follow. 
A) the most important factor affecting population growth in DVCs is demographic changes among the elderly. 
B) slower population growth is neither desirable nor productive for DVCs given the state of the economies in these nations. 
C) reduced birth rates must come first in DVCs, and then higher per capita incomes will follow. 
D) higher per capita incomes must come first in DVCs, and then reduced birth rates will follow.

Question 15

One of the major investment obstacles in less-developed nations is

Accepted Answer

A) an accumulation of savings with no place to invest the funds. 
B) a poor public infrastructure that hurts returns on private investment. 
C) a progressive tax system that is efficient in collecting taxes on investment. 
D) a low unemployment rate that makes it difficult to find the needed workers for businesses. 
A) an accumulation of savings with no place to invest the funds. 
B) a poor public infrastructure that hurts returns on private investment. 
C) a progressive tax system that is efficient in collecting taxes on investment. 
D) a low unemployment rate that makes it difficult to find the needed workers for businesses.

Question 16

Government-provided foreign aid to developing countries

Accepted Answer

A) has averaged about 1 percent of the IACs' GDP each year. 
B) has increased sharply and steadily since 1995. 
C) has dwarfed the size of foreign direct investment to the DVCs in recent years. 
D) declined in the late 1990s but increased from 2000 to 2008. 
A) has averaged about 1 percent of the IACs' GDP each year. 
B) has increased sharply and steadily since 1995. 
C) has dwarfed the size of foreign direct investment to the DVCs in recent years. 
D) declined in the late 1990s but increased from 2000 to 2008.

Question 17

Which of the following is most characteristic of most developing nations?

Accepted Answer

A) roughly equal distribution of income among the population 
B) high levels of labor productivity in agriculture 
C) low propensity to consume goods and services 
D) low levels of saving and investment 
A) roughly equal distribution of income among the population 
B) high levels of labor productivity in agriculture 
C) low propensity to consume goods and services 
D) low levels of saving and investment

Question 18

The idea that a person's productive efforts and his or her economic rewards are unrelated

Accepted Answer

A) is the neocolonialism view of economic development. 
B) describes the vicious circle of poverty. 
C) is the surplus labor theory of economic development. 
D) is the capricious universe view. 
A) is the neocolonialism view of economic development. 
B) describes the vicious circle of poverty. 
C) is the surplus labor theory of economic development. 
D) is the capricious universe view.

Question 19

Development economists suggest that a key strategy for the poorest DVCs to break out of their poverty is to implement policies that boost their

Accepted Answer

A) population growth for a greater labor supply. 
B) output and slow down their population growth. 
C) birth rates to expand their available resources. 
D) mortality rates to slow down their population growth. 
A) population growth for a greater labor supply. 
B) output and slow down their population growth. 
C) birth rates to expand their available resources. 
D) mortality rates to slow down their population growth.

Question 20

Which of the following is characteristic of DVCs?

Accepted Answer

A) A large percentage of the labor force is in agriculture. 
B) There are high levels of saving and investment. 
C) They have high labor productivity. 
D) There are high levels of training. 
A) A large percentage of the labor force is in agriculture. 
B) There are high levels of saving and investment. 
C) They have high labor productivity. 
D) There are high levels of training.

Exam 19: The Economics of Developing Countries

An example of direct foreign investment is

The two paths to economic development, which are the same for both developing countries and industrially advanced economies, are

Japan is a nation that achieved a high standard of living despite having a very limited supply of natural resources.

The richest 20 percent of the world's population receives more than 75 percent of the world's income, while the poorest 20 percent receives less than 2 percent of the world's income.

Over the next 15 years, out of every 10 people added to the world's population will be born in developing countries.

In recent years, many DVCs have come to realize that

For DVC per capita incomes to rise, birth rates must first be reduced.This statement describes the

Microcredit refers to

One policy recommended by most economists for promoting economic growth in DVCs is the nationalization and protection of domestic industries.

A highly active role by government may be needed to promote economic growth in low-income DVCs because of

The gap in the standards of living between the IACs (like the U.S., countries of Western Europe, and Japan) and the DVCs of Africa, Latin America, and Asia have been narrowing significantly over the decades.

One way through which industrially advanced economies can help DVCs is known as "official development assistance (ODA)," or more simply,

Studies generally show that if there is more investment in capital goods in DVCs, there will be greater

The demographic transition view of population and growth in DVCs is that

One of the major investment obstacles in less-developed nations is

Government-provided foreign aid to developing countries

Which of the following is most characteristic of most developing nations?

The idea that a person's productive efforts and his or her economic rewards are unrelated

Development economists suggest that a key strategy for the poorest DVCs to break out of their poverty is to implement policies that boost their

Which of the following is characteristic of DVCs?

Part A: Limits, Alternatives, and Choices

Part B: Limits, Alternatives, and Choices

Part A: The Market System and the Circular Flow

Part B: The Market System and the Circular Flow

Part A: Demand, Supply, and Market Equilibrium

Part B: Demand, Supply, and Market Equilibrium

Part A: Market Failures: Public Goods and Externalities

Part B: Market Failures: Public Goods and Externalities

Part A: Governments Role and Government Failure

Part B: Governments Role and Government Failure

Part A: An Introduction to Macroeconomics

Part B: An Introduction to Macroeconomics

Part A: Measuring the Economys Output

Part B: Measuring the Economys Output

Part A: Economic Growth

Part B: Economic Growth

Part A: Business Cycles, Unemployment, and Inflation

Part B: Business Cycles, Unemployment, and Inflation

Part A: Basic Macroeconomic Relationships

Part B: Basic Macroeconomic Relationships

Part A: The Aggregate Expenditures Model

Part B: The Aggregate Expenditures Model

Part A: Aggregate Demand and Aggregate Supply

Part B: Aggregate Demand and Aggregate Supply

Part A: Fiscal Policy, Deficits, Surpluses, and Debt

Part B: Fiscal Policy, Deficits, Surpluses, and Debt

Part A: Money, Banking, and Money Creation

Part B: Money, Banking, and Money Creation

Part A: Interest Rates and Monetary Policy

Part B: Interest Rates and Monetary Policy

Part A: Long-Run Macroeconomic Adjustments

Part B: Long-Run Macroeconomic Adjustments

Part A: International Trade

Part B: International Trade

Part C: Financial Economics

Part A: The Balance of Payments and Exchange Rates

Part B: The Balance of Payments and Exchange Rates

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