Exam 38: Macro Policy in Developing Countries

In a dual economy, it is generally the case that the majority of the population works in the:

In comparison to most developed economies, developing countries:

In most developing countries, an effective fiscal policy is:

Communal property rights and tradition, rather than market institutions, determine economic relationships in many developing countries.

Consider two hypothetical developing countries,both with very low incomes at similar levels.Country A has a very even distribution of income.Nearly everyone in country A has a similar income.Country B has great variation in income.A small percentage of persons in country B would be classified as middle class,and a smaller number as wealthy,by the standards of developed nations.All other things equal,which of these countries has more potential for development?

Distinguish between growth and development.

Developing countries have different institutional priorities than developed countries for all of the following reasons except that they:

Which of the following is not an obstacle to development?

When Zimbabwe needed to finance the war against Congo, the government issued bonds and forced the Central Bank to buy those bonds in exchange for newly-printed Zimbabwean dollars. This action prompted a hyperinflation of almost 100,000 percent. This is an example of a lack of:

On the basis of exchange rates,per capita income in developing countries is around $500 per year;in the United States per capita income is about $61,000.Why does this overstate the difference in living standards? How does the purchasing power parity method of comparing income in different countries deal with that problem?

When income comparisons are made using purchasing power parity rather than market exchange rates, the gap in per capita income between developed and developing countries becomes smaller.

The dual nature of financial markets in developing countries-traditional and modern-implies that central banks in developing countries:

Development refers to an increase in:

In the early 2000s, Ecuador replaced its currency, the sucre, with the U.S. dollar as its official currency. What would prompt a country to abandon its own currency and adopt the currency of the United States?

Because of the structure of government in many developing countries,many economists who,in Western developed countries,favor activist government policies may well favor Classical laissez-faire policies for the same reasons that early Classical economists did-because they have a profound distrust of the governments.Why do these economists often distrust government officials in countries with developing and transitional economies?

In 1991, El Salvador ended a fifteen-year civil war, and the new government in place introduced a number of liberalization policies that included privatization, exchange rate liberalization, tariff reductions, tax exemptions to foreign direct investment, and a more market-oriented economy. These economic reforms are examples of:

Countries such as China and South Korea have increased not only the size of their labor force but also the quality of their labor force over time. Workers in these countries have higher levels of education and skill that promote increases in the productivity per worker. If this is the case, these countries have experienced:

In the late 1990s, Thailand, Malaysia, and Indonesia all experienced sharp declines in the value of their currencies; this resulted in economic instability and crisis. The collapse in the values of their currencies undermined their development by:

Infant mortality rates in developing countries:

If a developing country wants to limit the ability of its citizens to purchase foreign assets, but does not want to restrict other international transactions, it would offer: