Question 1

Which of the following would be most likely to encourage capital formation in a less-developed country?

Accepted Answer

A)  The expectation of sustained high inflation. 
B)  The expectation that property rights will be highly secure in the years ahead. 
C)  The imposition of high tariffs and other restraints limiting imports. 
D)  Higher personal and corporate tax rates. 
A)  The expectation of sustained high inflation. 
B)  The expectation that property rights will be highly secure in the years ahead. 
C)  The imposition of high tariffs and other restraints limiting imports. 
D)  Higher personal and corporate tax rates.

Question 2

According to the text, Ireland and Israel are classified as less developed countries (LDCs).

Accepted Answer

A) True 
 B)False

Question 3

Which of the following does not hinder economic development?

Accepted Answer

A)  Low birth rates. 
B)  Low GDP that limits saving and investment. 
C)  Lack of knowledge. 
D)  Lack of technology. 
E)  Lack of physical capital. 
A)  Low birth rates. 
B)  Low GDP that limits saving and investment. 
C)  Lack of knowledge. 
D)  Lack of technology. 
E)  Lack of physical capital.

Question 4

Which of the following is not a characteristic of most less-developed countries?

Accepted Answer

A)  Inadequate human capital. 
B)  Inadequate capital goods. 
C)  High population growth rate. 
D)  Inadequate water supplies. 
E)  High productivity. 
A)  Inadequate human capital. 
B)  Inadequate capital goods. 
C)  High population growth rate. 
D)  Inadequate water supplies. 
E)  High productivity.

Question 5

GDP per capita is a relatively good measurement of:

Accepted Answer

A)  the distribution of income. 
B)  purchasing power. 
C)  household production. 
D)  the standard of living. 
A)  the distribution of income. 
B)  purchasing power. 
C)  household production. 
D)  the standard of living.

Question 6

There is a direct link between a nation's per capita real GDP and its:

Accepted Answer

A)  c and e. 
B)  c, d, and e. 
C)  human capital investment. 
D)  population. 
E)  life expectancy. 
A)  c and e. 
B)  c, d, and e. 
C)  human capital investment. 
D)  population. 
E)  life expectancy.

Question 7

Which of the following is a problem when comparing GDPs per capita between nations?

Accepted Answer

A)  GDP per capita fails to measure income distribution. 
B)  Fluctuations in exchange rates affect differences in GDP per capita. 
C)  GDP per capita is subject to greater measurement errors for LDCs compared to IACs. 
D)  All of the above. 
A)  GDP per capita fails to measure income distribution. 
B)  Fluctuations in exchange rates affect differences in GDP per capita. 
C)  GDP per capita is subject to greater measurement errors for LDCs compared to IACs. 
D)  All of the above.

Question 8

The vicious circle of poverty is the trap that parents with low education tend to have children with low education.

Accepted Answer

A) True 
 B)False

Question 9

One reason that a poor nation remains poor over time is that even though total national real GDP grows,

Accepted Answer

A)  c and e. 
B)  c, d, and e. 
C)  it is too small to begin with. 
D)  the growth rate is smaller than the growth rate of industrialized nations. 
E)  it does not grow faster than population. 
A)  c and e. 
B)  c, d, and e. 
C)  it is too small to begin with. 
D)  the growth rate is smaller than the growth rate of industrialized nations. 
E)  it does not grow faster than population.

Question 10

When per capita real GDP is increasing, real output is growing:

Accepted Answer

A)  more rapidly than prices. 
B)  more rapidly than population. 
C)  less rapidly than prices. 
D)  less rapidly than population. 
A)  more rapidly than prices. 
B)  more rapidly than population. 
C)  less rapidly than prices. 
D)  less rapidly than population.

Question 11

The vicious circle of poverty refers to the fact that LDCs are poor because other countries do not want to buy their goods and services.

Accepted Answer

A) True 
 B)False

Question 12

The recent growth records of Japan and Hong Kong during the last 50 years indicate that a nation can grow rapidly without:

Accepted Answer

A)  securely defined property rights. 
B)  adopting modern technology. 
C)  significant capital formation. 
D)  abundant domestic natural resources. 
A)  securely defined property rights. 
B)  adopting modern technology. 
C)  significant capital formation. 
D)  abundant domestic natural resources.

Question 13

GDP per capita provides a reasonably accurate measurement of a country's income distribution.

Accepted Answer

A) True 
 B)False

Question 14

If a country's real GDP is growing at 5 percent and the population is also growing at 5 percent, its:

Accepted Answer

A)  per capita real GDP grows at an increasing rate. 
B)  per capita real GDP grows at a constant rate. 
C)  population growth will eventually exceed real GDP. 
D)  per capita real GDP decreases at a constant rate. 
E)  per capita real GDP does not change. 
A)  per capita real GDP grows at an increasing rate. 
B)  per capita real GDP grows at a constant rate. 
C)  population growth will eventually exceed real GDP. 
D)  per capita real GDP decreases at a constant rate. 
E)  per capita real GDP does not change.

Question 15

Which of the following is correct ?

Accepted Answer

A)  Economic development is more quantitative than economic growth. 
B)  A country cannot achieve economic growth with a limited base of natural resources. 
C)  Infrastructure is capital provide by the private sector. 
D)  All of the above are true. 
E)  All of the above are false. 
A)  Economic development is more quantitative than economic growth. 
B)  A country cannot achieve economic growth with a limited base of natural resources. 
C)  Infrastructure is capital provide by the private sector. 
D)  All of the above are true. 
E)  All of the above are false.

Question 16

Most LDCs face the problems of low population growth and excessive saving.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a characteristic of an LDC?

Accepted Answer

A)  Capital flight. 
B)  Vicious circle of poverty. 
C)  Lack of entrepreneurs. 
D)  All of the above. 
A)  Capital flight. 
B)  Vicious circle of poverty. 
C)  Lack of entrepreneurs. 
D)  All of the above.

Question 18

In order to achieve a high economic freedom rating, a country must:

Accepted Answer

A)  provide secure protection of privately owned property and evenhanded enforcement of contracts. 
B)  refrain from creating barriers that limit domestic and international trade. 
C)  rely more fully on markets rather than governments to allocate goods and resources. 
D)  do all of the above. 
A)  provide secure protection of privately owned property and evenhanded enforcement of contracts. 
B)  refrain from creating barriers that limit domestic and international trade. 
C)  rely more fully on markets rather than governments to allocate goods and resources. 
D)  do all of the above.

Question 19

Explain why the LDCs are unable to invest much in capital goods and human capital.

Accepted Answer

The demands of the growing populations i

Question 20

Which of the following is most important if the living standards of people residing in a country are going to improve?

Accepted Answer

A)  growth of population 
B)  growth of per capita GDP 
C)  growth of the money supply 
D)  growth of government expenditures as a share of GDP 
A)  growth of population 
B)  growth of per capita GDP 
C)  growth of the money supply 
D)  growth of government expenditures as a share of GDP

Exam 23: Growth and the Less-Developed Countries

Which of the following would be most likely to encourage capital formation in a less-developed country?

According to the text, Ireland and Israel are classified as less developed countries (LDCs).

Which of the following does not hinder economic development?

Which of the following is not a characteristic of most less-developed countries?

GDP per capita is a relatively good measurement of:

There is a direct link between a nation's per capita real GDP and its:

Which of the following is a problem when comparing GDPs per capita between nations?

The vicious circle of poverty is the trap that parents with low education tend to have children with low education.

One reason that a poor nation remains poor over time is that even though total national real GDP grows,

When per capita real GDP is increasing, real output is growing:

The vicious circle of poverty refers to the fact that LDCs are poor because other countries do not want to buy their goods and services.

The recent growth records of Japan and Hong Kong during the last 50 years indicate that a nation can grow rapidly without:

GDP per capita provides a reasonably accurate measurement of a country's income distribution.

If a country's real GDP is growing at 5 percent and the population is also growing at 5 percent, its:

Which of the following is correct ?

Most LDCs face the problems of low population growth and excessive saving.

Which of the following is a characteristic of an LDC?

In order to achieve a high economic freedom rating, a country must:

Explain why the LDCs are unable to invest much in capital goods and human capital.

Which of the following is most important if the living standards of people residing in a country are going to improve?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Filters