Question 1

Increases in the total real output of many DVCs do not increase the nation's standard of living because

Accepted Answer

A) diminishing returns may be encountered in increasing total output. 
B) population increases may dissipate the increase in real output. 
C) disguised unemployment in agriculture will persist. 
D) surplus farm labor may move from rural areas to industrial areas, causing unemployment. 
A) diminishing returns may be encountered in increasing total output. 
B) population increases may dissipate the increase in real output. 
C) disguised unemployment in agriculture will persist. 
D) surplus farm labor may move from rural areas to industrial areas, causing unemployment.

Question 2

Which of the following factors contributes most to the high per capita incomes in developed nations?

Accepted Answer

A) high rates of population growth 
B) high rates of economic growth 
C) low rates of investment 
D) low rates of saving 
A) high rates of population growth 
B) high rates of economic growth 
C) low rates of investment 
D) low rates of saving

Question 3

Low-income developing countries generally have the following characteristics except

Accepted Answer

A) low population growth rates. 
B) low levels of industrialization. 
C) dependency on exports of agricultural products or raw materials. 
D) minimal amounts of capital resources. 
A) low population growth rates. 
B) low levels of industrialization. 
C) dependency on exports of agricultural products or raw materials. 
D) minimal amounts of capital resources.

Question 4

Which of the following is a factor limiting saving in DVCs?

Accepted Answer

A) the lack of foreign aid and loans from the World Bank 
B) Governments control the banking system and set low interest rates. 
C) the flight of private savings to investments in IACs, where there is less risk 
D) Those who do save make their savings available only to their families, who use it for consumption. 
A) the lack of foreign aid and loans from the World Bank 
B) Governments control the banking system and set low interest rates. 
C) the flight of private savings to investments in IACs, where there is less risk 
D) Those who do save make their savings available only to their families, who use it for consumption.

Question 5

Infrastructure is best illustrated by

Accepted Answer

A) business equipment and factories. 
B) agricultural machinery and tools. 
C) financial institutions. 
D) roads and bridges. 
A) business equipment and factories. 
B) agricultural machinery and tools. 
C) financial institutions. 
D) roads and bridges.

Question 6

An obstacle to economic growth in developing countries is

Accepted Answer

A) the limited demand for natural resources. 
B) the limited supply of capital goods. 
C) a decline in population growth. 
D) the low productivity of capital. 
A) the limited demand for natural resources. 
B) the limited supply of capital goods. 
C) a decline in population growth. 
D) the low productivity of capital.

Question 7

Which of the following is a recommended policy for industrially advanced countries to adopt in order to foster economic growth in DVCs?

Accepted Answer

A) admitting more temporary workers from DVCs 
B) reducing the amount of debt relief for DVCs to make them less dependent 
C) eliminating loans from the World Bank because it encourages bureaucracy 
D) eliminating financial control of central banks where they have been established 
A) admitting more temporary workers from DVCs 
B) reducing the amount of debt relief for DVCs to make them less dependent 
C) eliminating loans from the World Bank because it encourages bureaucracy 
D) eliminating financial control of central banks where they have been established

Question 8

Large agricultural subsidies for food and fiber in IACs hurt the economies of the DVCs by

Accepted Answer

A) causing higher prices for imported food products. 
B) lowering saving rates in the DVCs. 
C) encouraging "brain drains" from the DVCs. 
D) reducing world agricultural prices and thus export income of the DVCs. 
A) causing higher prices for imported food products. 
B) lowering saving rates in the DVCs. 
C) encouraging "brain drains" from the DVCs. 
D) reducing world agricultural prices and thus export income of the DVCs.

Question 9

The international agency that lends money to DVCs for economic development projects is the

Accepted Answer

A) World Bank. 
B) International Monetary Fund (IMF). 
C) World Trade Organization (WTO). 
D) World Credit Union. 
A) World Bank. 
B) International Monetary Fund (IMF). 
C) World Trade Organization (WTO). 
D) World Credit Union.

Question 10

Which of the following describes the vicious circle of poverty?

Accepted Answer

A) Government spending for public goods is inflationary, and this undermines incentives to save and invest. 
B) Higher incomes increase consumption at the expense of capital accumulation, which causes income to fall. 
C) Low per capita incomes cause low levels of saving and investment, which mean low productivity and therefore low incomes. 
D) A growing national income increases the demand for money, which increases the interest rate and reduces investment. 
A) Government spending for public goods is inflationary, and this undermines incentives to save and invest. 
B) Higher incomes increase consumption at the expense of capital accumulation, which causes income to fall. 
C) Low per capita incomes cause low levels of saving and investment, which mean low productivity and therefore low incomes. 
D) A growing national income increases the demand for money, which increases the interest rate and reduces investment.

Question 11

The poorest 20 percent of the world's population receive what percentage of world income?

Accepted Answer

A) less than 2 percent 
B) about 4 percent 
C) around 8 percent 
D) close to 10 percent 
A) less than 2 percent 
B) about 4 percent 
C) around 8 percent 
D) close to 10 percent

Question 12

Which of the following factors contributes to the weak economic growth in DVCs?

Accepted Answer

A) an increase in labor productivity in DVCs 
B) a decrease in international debts of DVCs 
C) an increase in the rate of saving in a DVC 
D) a decrease in the prices of DVC natural resources 
A) an increase in labor productivity in DVCs 
B) a decrease in international debts of DVCs 
C) an increase in the rate of saving in a DVC 
D) a decrease in the prices of DVC natural resources

Question 13

An IAC (industrially advanced country) had a per capita income of $28,200, while a DVC (developing country) had a per capita income of $1,200 in a given year.If both countries experience a per-capita-income growth of 2 percent, then their respective per-capita-income levels one year later will become

Accepted Answer

A) $33,840 and $1,440. 
B) $28,764 and $1,224. 
C) $33,840 and $1,224. 
D) $28,764 and $1,440. 
A) $33,840 and $1,440. 
B) $28,764 and $1,224. 
C) $33,840 and $1,224. 
D) $28,764 and $1,440.

Question 14

Industrially advanced countries can best help developing countries by

Accepted Answer

A) establishing price supports for the products produced by DVCs. 
B) increasing tariffs and quotas on products produced by DVCs. 
C) increasing the flows of private capital to DVCs. 
D) increasing control over DVCs' capital markets. 
A) establishing price supports for the products produced by DVCs. 
B) increasing tariffs and quotas on products produced by DVCs. 
C) increasing the flows of private capital to DVCs. 
D) increasing control over DVCs' capital markets.

Question 15

The demographic transition concept suggests that

Accepted Answer

A) effective birth control is the primary prerequisite of DVC income growth. 
B) income growth must first occur before DVC birth rates will decline. 
C) children are economic assets in the IACs but economic liabilities in the DVCs. 
D) the IACs will have higher birth rates than the DVCs. 
A) effective birth control is the primary prerequisite of DVC income growth. 
B) income growth must first occur before DVC birth rates will decline. 
C) children are economic assets in the IACs but economic liabilities in the DVCs. 
D) the IACs will have higher birth rates than the DVCs.

Question 16

Successful foreign aid programs

Accepted Answer

A) enhance a DVC's resources and therefore shift its production possibilities curve to the left. 
B) enhance a DVC's resources and therefore shift its production possibilities curve to the right. 
C) move the DVC from a high-investment-low-consumption position to a low-investment-high-consumption position on its stable production possibilities curve. 
D) cause a DVC's exchange rate to depreciate. 
A) enhance a DVC's resources and therefore shift its production possibilities curve to the left. 
B) enhance a DVC's resources and therefore shift its production possibilities curve to the right. 
C) move the DVC from a high-investment-low-consumption position to a low-investment-high-consumption position on its stable production possibilities curve. 
D) cause a DVC's exchange rate to depreciate.

Question 17

Which of the following is not a DVC policy likely to increase DVC economic growth?

Accepted Answer

A) encouraging direct foreign investment 
B) opening economics to world trade 
C) establishing independent central banks 
D) encouraging emigration of highly skilled workers 
A) encouraging direct foreign investment 
B) opening economics to world trade 
C) establishing independent central banks 
D) encouraging emigration of highly skilled workers

Question 18

In contrast to international development efforts in most of the 20th century, more recent projects like microfinance, microcredit, and cash transfers in the last few decades represent a major shift.That is because these recent projects are

Accepted Answer

A) all sponsored by local governments. 
B) done through the United Nations. 
C) launched by universities and colleges. 
D) focused on giving direct aid to poor individuals. 
A) all sponsored by local governments. 
B) done through the United Nations. 
C) launched by universities and colleges. 
D) focused on giving direct aid to poor individuals.

Question 19

Which of the following does not correlate positively with economic growth?

Accepted Answer

A) output per capita 
B) life expectancy 
C) the percentage of the population engaged in agriculture 
D) the literacy rate 
A) output per capita 
B) life expectancy 
C) the percentage of the population engaged in agriculture 
D) the literacy rate

Question 20

The "brain drain" problem in the DVCs refers to the fact that the best-educated workers

Accepted Answer

A) are concentrated in the public, rather than the private, sector. 
B) are concentrated in the private, rather than the public, sector. 
C) are concentrated in urban, rather than rural, areas. 
D) have emigrated from the DVCs to the IACs. 
A) are concentrated in the public, rather than the private, sector. 
B) are concentrated in the private, rather than the public, sector. 
C) are concentrated in urban, rather than rural, areas. 
D) have emigrated from the DVCs to the IACs.

Exam 19: The Economics of Developing Countries

Increases in the total real output of many DVCs do not increase the nation's standard of living because

Which of the following factors contributes most to the high per capita incomes in developed nations?

Low-income developing countries generally have the following characteristics except

Which of the following is a factor limiting saving in DVCs?

Infrastructure is best illustrated by

An obstacle to economic growth in developing countries is

Which of the following is a recommended policy for industrially advanced countries to adopt in order to foster economic growth in DVCs?

Large agricultural subsidies for food and fiber in IACs hurt the economies of the DVCs by

The international agency that lends money to DVCs for economic development projects is the

Which of the following describes the vicious circle of poverty?

The poorest 20 percent of the world's population receive what percentage of world income?

Which of the following factors contributes to the weak economic growth in DVCs?

Industrially advanced countries can best help developing countries by

The demographic transition concept suggests that

Successful foreign aid programs

Which of the following is not a DVC policy likely to increase DVC economic growth?

In contrast to international development efforts in most of the 20th century, more recent projects like microfinance, microcredit, and cash transfers in the last few decades represent a major shift.That is because these recent projects are

Which of the following does not correlate positively with economic growth?

The "brain drain" problem in the DVCs refers to the fact that the best-educated workers

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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