Question 1

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 2

In recent years, the governments of the IACs have

Accepted Answer

A)  forgiven a portion of the debt owed by some low-income DVCs. 
B)  substantially reduced foreign aid to the DVCs. 
C)  substantially reduced their contributions to the World Bank. 
D)  discouraged skilled DVC workers from emigrating to the IACs. 
A)  forgiven a portion of the debt owed by some low-income DVCs. 
B)  substantially reduced foreign aid to the DVCs. 
C)  substantially reduced their contributions to the World Bank. 
D)  discouraged skilled DVC workers from emigrating to the IACs.

Question 3

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 4

If a technological advance expands output and requires a smaller investment in capital goods, this technological advance

Accepted Answer

A)  is capital-using. 
B)  must involve nonﬁnancial investment. 
C)  is capital-saving. 
D)  must pertain to the infrastructure. 
A)  is capital-using. 
B)  must involve nonﬁnancial investment. 
C)  is capital-saving. 
D)  must pertain to the infrastructure.

Question 5

The building of a new factory by a corporation would be an example of increasing the infrastructure
in a developing nation.

Accepted Answer

A) True 
 B)False

Question 6

The role of government in fostering economic growth in DVCs has been criticized because

Accepted Answer

A)  most governments operate as dictatorships. 
B)  there is often poor administration and corruption in government. 
C)  government is generally supportive of business at the expense of labor. 
D)  governments have adopted the unpopular method of forced savings to stimulate investment. 
A)  most governments operate as dictatorships. 
B)  there is often poor administration and corruption in government. 
C)  government is generally supportive of business at the expense of labor. 
D)  governments have adopted the unpopular method of forced savings to stimulate investment.

Question 7

Which two of the following countries had the worst score in the Corruption Perceptions Index in 2015?

Accepted Answer

A)  Italy and Greece 
B)  China and Singapore 
C)  Mexico and Russia 
D)  Somalia and Afghanistan 
A)  Italy and Greece 
B)  China and Singapore 
C)  Mexico and Russia 
D)  Somalia and Afghanistan

Question 8

The fertility rates-the number of children per woman's lifetime-in most DVCs (developing countries) are

Accepted Answer

A)  rising slowly. 
B)  rising quickly. 
C)  staying constant. 
D)  declining. 
A)  rising slowly. 
B)  rising quickly. 
C)  staying constant. 
D)  declining.

Question 9

A recommended policy for developing countries to stimulate economic growth would be

Accepted Answer

A)  abolishing central banks. 
B)  more central planning by government. 
C)  encouraging more direct foreign investment. 
D)  expanding employment in state industries. 
A)  abolishing central banks. 
B)  more central planning by government. 
C)  encouraging more direct foreign investment. 
D)  expanding employment in state industries.

Question 10

How can the DVCs break out of the vicious circle of poverty?

Accepted Answer

Many economists think that the key to br

Question 11

Which of the following is a true statement?

Accepted Answer

A)  Direct foreign investment to DVCs is increasingly provided by commercial banks. 
B)  Direct foreign investment to DVCs has dwindled to near zero in recent years. 
C)  Approximately 5 percent of the GDP of IACs goes to foreign aid. 
D)  Foreign aid from the IACs to the DVCs has greatly expanded in the past several years. 
A)  Direct foreign investment to DVCs is increasingly provided by commercial banks. 
B)  Direct foreign investment to DVCs has dwindled to near zero in recent years. 
C)  Approximately 5 percent of the GDP of IACs goes to foreign aid. 
D)  Foreign aid from the IACs to the DVCs has greatly expanded in the past several years.

Question 12

A recommended policy for DVCs to implement that promotes economic growth is

Accepted Answer

A)  establishing realistic policies for exchange rates. 
B)  obtaining more low-interest loans from the U.S. government. 
C)  encouraging more tariffs and quotas to protect DVC businesses. 
D)  discouraging direct foreign investment to make DVCs more self-suﬃcient. 
A)  establishing realistic policies for exchange rates. 
B)  obtaining more low-interest loans from the U.S. government. 
C)  encouraging more tariffs and quotas to protect DVC businesses. 
D)  discouraging direct foreign investment to make DVCs more self-suﬃcient.

Question 13

More than 75 percent of the world's income is earned by what percentage of the world's population?

Accepted Answer

A)  5 percent 
B)  10 percent 
C)  20 percent 
D)  40 percent 
A)  5 percent 
B)  10 percent 
C)  20 percent 
D)  40 percent

Question 14

How are countries classiﬁed based on income?

Accepted Answer

The World Bank classiﬁes countries into

Question 15

One recommended policy that IACs could adopt to help DVCs is to recruit and hire skilled workers
from DVCs for businesses in IACs.

Accepted Answer

A) True 
 B)False

Question 16

The World Bank operates primarily as a

Accepted Answer

A)  deposit institution for nations' gold supplies. 
B)  coordinator for private banks in major nations. 
C)  lender of last resort to less-developed nations. 
D)  U.S. government agency that supervises banks worldwide. 
A)  deposit institution for nations' gold supplies. 
B)  coordinator for private banks in major nations. 
C)  lender of last resort to less-developed nations. 
D)  U.S. government agency that supervises banks worldwide.

Question 17

All of the following contribute to low investment spending in DVCs except

Accepted Answer

A)  low rates of saving. 
B)  inadequacy of public capital goods (infrastructure). 
C)  political instability. 
D)  expensive labor. 
A)  low rates of saving. 
B)  inadequacy of public capital goods (infrastructure). 
C)  political instability. 
D)  expensive labor.

Question 18

Economic growth in the DVCs might increase if IACs

Accepted Answer

A)  reduce their tariffs and import quotas. 
B)  encourage more immigration of highly skilled DVC workers. 
C)  outlaw direct private investment abroad by IAC corporations. 
D)  discourage capital ﬂight to the DVCs. 
A)  reduce their tariffs and import quotas. 
B)  encourage more immigration of highly skilled DVC workers. 
C)  outlaw direct private investment abroad by IAC corporations. 
D)  discourage capital ﬂight to the DVCs.

Question 19

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 20

Land reform (or the reform of land ownership) is a relatively minor institutional obstacle to economic
growth in many developing countries.

Accepted Answer

A) True 
 B)False

Exam 22: The Economics of Developing Countries

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

In recent years, the governments of the IACs have

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

If a technological advance expands output and requires a smaller investment in capital goods, this technological advance

The building of a new factory by a corporation would be an example of increasing the infrastructure in a developing nation.

The role of government in fostering economic growth in DVCs has been criticized because

Which two of the following countries had the worst score in the Corruption Perceptions Index in 2015?

The fertility rates-the number of children per woman's lifetime-in most DVCs (developing countries) are

A recommended policy for developing countries to stimulate economic growth would be

How can the DVCs break out of the vicious circle of poverty?

Which of the following is a true statement?

A recommended policy for DVCs to implement that promotes economic growth is

More than 75 percent of the world's income is earned by what percentage of the world's population?

How are countries classiﬁed based on income?

One recommended policy that IACs could adopt to help DVCs is to recruit and hire skilled workers from DVCs for businesses in IACs.

The World Bank operates primarily as a

All of the following contribute to low investment spending in DVCs except

Economic growth in the DVCs might increase if IACs

Which of the following describes the vicious circle of poverty?

Land reform (or the reform of land ownership) is a relatively minor institutional obstacle to economic growth in many developing countries.

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

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