Exam 38: Macro Policy in Developing Countries

On January 1, 2001, El Salvador "dollarized" its economy. The U.S. dollar circulated throughout the country along with the Salvadoran colon for the first year. By the end of 2002, the official currency circulating in the economy was the U.S. dollar. El Salvador abandoned its own currency and adopted the currency of the United States because:

In the early 2000s, Ecuador replaced its currency, the sucre, with the U.S. dollar in order to solve its inflation problem. As long as Ecuador maintains the U.S. dollar as its official currency, what will happen to the monetary policy of Ecuador?

Many developing countries have "dual economies".What is a dual economy and how does it affect a country's strategy of converting a developing economy to a market economy?

Opponents of using the inflation tax to finance government budget deficits argue that:

What are the three potential sources of investment for development,and what sorts of difficulties are there with each?

If the government cuts taxes, then it has undertaken:

The difference, in terms of economic goals, between developing countries and developed countries is that:

Developing countries have:

Using exchange rates based on purchasing power parity to compare per capita incomes in developing and developed countries might lead one to conclude that people in developing countries:

Limited capital account convertibility provides:

When the IMF provides loans to developing countries, it often requires these countries to adopt:

How are the economic institutions of developed economies different from those of developing countries? How does this affect the implementation of fiscal and monetary policy?

Explain how the competition among countries for foreign investment can result in focal points and economic takeoff.

A policy change represents a:

At the end of the Korean War, South Korea was one of the poorest countries in the world. Fifty years later, it is now considered a developed country. Which of the following phenomena is most likely to explain South Korea's development over the last 50 years?

In the early 2000s, Chinese officials indicted members of a forgery syndicate that sold several hundred diplomas to high school graduates who needed the diplomas to take employment tests. This situation, where having the certificate of knowledge is more important than the knowledge itself, is known as:

The immediate cause of inflations in most developing countries is that the central bank is issuing too much money.What is the underlying cause of those inflations?

Proponents of using the inflation tax to finance government budget deficits argue that:

The problem of political instability has been greatest in which continent?

In the early 2000s, there was a strong black market for Chinese yuan. It is widely held that the Chinese yuan is undervalued. Based on this information, we know that China: