Question 1

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. D

Question 2

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. D

Question 3

The idea that a person's productive efforts and his or her economic rewards are unrelated:

Accepted Answer

A)  is the neocolonialism view of economic development. 
B)  describes the vicious circle of poverty. 
C)  is the surplus labor theory of economic development. 
D)  is the capricious universe view. 
A)  is the neocolonialism view of economic development. 
B)  describes the vicious circle of poverty. 
C)  is the surplus labor theory of economic development. 
D)  is the capricious universe view. D

Question 4

Most nations of the world are now IACs,not middle- and low-income DVCs.

Accepted Answer

A) True 
 B)False

Question 5

Capital flight is a problem to DVCs because it:

Accepted Answer

A)  causes the value of a DVC's currency to appreciate. 
B)  reduces the volume of DVC investment. 
C)  reduces the flow of foreign aid from the IACs. 
D)  causes inflation in the DVCs. 
A)  causes the value of a DVC's currency to appreciate. 
B)  reduces the volume of DVC investment. 
C)  reduces the flow of foreign aid from the IACs. 
D)  causes inflation in the DVCs.

Question 6

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 7

Economic growth may hinge on whether individuals and institutions within a nation want growth badly enough to change their traditional ways of doing things.This statement refers to:

Accepted Answer

A)  in-kind investment. 
B)  the capricious universe view. 
C)  human capital investment. 
D)  the will to develop. 
A)  in-kind investment. 
B)  the capricious universe view. 
C)  human capital investment. 
D)  the will to develop.

Question 8

Development assistance as a percentage of GDP is greatest for which of the following industrialized nations (as of 2012)?

Accepted Answer

A)  The United States. 
B)  Norway. 
C)  Sweden. 
D)  Netherlands. 
A)  The United States. 
B)  Norway. 
C)  Sweden. 
D)  Netherlands.

Question 9

Which of the following is generally not an effective strategy to promote DVC growth?

Accepted Answer

A)  Microlending. 
B)  Human capital development. 
C)  Fighting wars against neighbors to obtain resources and stimulate aggregate demand through arms spending. 
D)  Controlling inflation. 
A)  Microlending. 
B)  Human capital development. 
C)  Fighting wars against neighbors to obtain resources and stimulate aggregate demand through arms spending. 
D)  Controlling inflation.

Question 10

The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S.aid programs.

Accepted Answer

A) True 
 B)False

Question 11

Over the next 15 years,___ out of every 10 people added to the world's population will be born in developing countries.

Accepted Answer

A)  6 
B)  7 
C)  8 
D)  9 
A)  6 
B)  7 
C)  8 
D)  9

Question 12

If two nations have different per capita income levels and their rates of economic growth are identical,then the absolute per capita income differential:

Accepted Answer

A)  will remain constant. 
B)  may either widen or diminish. 
C)  will diminish. 
D)  will widen. 
A)  will remain constant. 
B)  may either widen or diminish. 
C)  will diminish. 
D)  will widen.

Question 13

Foreign aid to the DVCs has been criticized:

Accepted Answer

A)  because it may generate economic dependence on the IACs. 
B)  because it encourages the centralization of government power over the economy. 
C)  because government corruption in the DVCs causes aid to be misused. 
D)  for all of these reasons. 
A)  because it may generate economic dependence on the IACs. 
B)  because it encourages the centralization of government power over the economy. 
C)  because government corruption in the DVCs causes aid to be misused. 
D)  for all of these reasons.

Question 14

Small loans to entrepreneurs and small business owners in DVCs are referred to as:

Accepted Answer

A)  human capital development projects. 
B)  microfinance. 
C)  capital flight promotion systems. 
D)  incubator lending. 
A)  human capital development projects. 
B)  microfinance. 
C)  capital flight promotion systems. 
D)  incubator lending.

Question 15

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 16

In the DVCs,underemployment frequently takes the form of:

Accepted Answer

A)  factory workers who are working longer hours than they would prefer. 
B)  workers who are employed inefficiently in small industry when they could be highly productive in agriculture. 
C)  farmers whose productivity is very low. 
D)  craft workers and artisans who are replaced by simple machinery and equipment. 
A)  factory workers who are working longer hours than they would prefer. 
B)  workers who are employed inefficiently in small industry when they could be highly productive in agriculture. 
C)  farmers whose productivity is very low. 
D)  craft workers and artisans who are replaced by simple machinery and equipment.

Question 17

The government of a DVC may force the economy to save by deliberately causing inflation.This policy is undesirable because inflation may:

Accepted Answer

A)  distort investment away from productive facilities and toward luxury housing and precious metals. 
B)  increase voluntary saving because the value of money is depreciating. 
C)  contribute to a balance of trade surplus. 
D)  entail all of these problems. 
A)  distort investment away from productive facilities and toward luxury housing and precious metals. 
B)  increase voluntary saving because the value of money is depreciating. 
C)  contribute to a balance of trade surplus. 
D)  entail all of these problems.

Question 18

If the real GDP of a DVC increases from $600 billion to $630 billion and its population increases from 200 million to 216 million,its real per capita GDP will have:

Accepted Answer

A)  increased by about $83. 
B)  decreased by about $83. 
C)  remained unchanged. 
D)  decreased by about $19. 
A)  increased by about $83. 
B)  decreased by about $83. 
C)  remained unchanged. 
D)  decreased by about $19.

Question 19

In many of the sub-Saharan African nations:

Accepted Answer

A)  population is growing more rapidly than food production. 
B)  population growth is causing deforestation and diminished land quality. 
C)  governments have favored investment in industry and military spending rather than investment for agriculture. 
D)  all of these have been true. 
A)  population is growing more rapidly than food production. 
B)  population growth is causing deforestation and diminished land quality. 
C)  governments have favored investment in industry and military spending rather than investment for agriculture. 
D)  all of these have been true.

Question 20

Suppose that surplus labor in a Pakistani village is used to build a medical clinic and dig several wells.This is an illustration of:

Accepted Answer

A)  foreign aid. 
B)  capital-saving investment. 
C)  in-kind investment. 
D)  technological advance. 
A)  foreign aid. 
B)  capital-saving investment. 
C)  in-kind investment. 
D)  technological advance.

Exam 41: The Economics of Developing Countries

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

Which of the following is a true statement?

The idea that a person's productive efforts and his or her economic rewards are unrelated:

Most nations of the world are now IACs,not middle- and low-income DVCs.

Capital flight is a problem to DVCs because it:

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

Economic growth may hinge on whether individuals and institutions within a nation want growth badly enough to change their traditional ways of doing things.This statement refers to:

Development assistance as a percentage of GDP is greatest for which of the following industrialized nations (as of 2012)?

Which of the following is generally not an effective strategy to promote DVC growth?

The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S.aid programs.

Over the next 15 years,___ out of every 10 people added to the world's population will be born in developing countries.

If two nations have different per capita income levels and their rates of economic growth are identical,then the absolute per capita income differential:

Foreign aid to the DVCs has been criticized:

Small loans to entrepreneurs and small business owners in DVCs are referred to as:

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

In the DVCs,underemployment frequently takes the form of:

The government of a DVC may force the economy to save by deliberately causing inflation.This policy is undesirable because inflation may:

If the real GDP of a DVC increases from $600 billion to $630 billion and its population increases from 200 million to 216 million,its real per capita GDP will have:

In many of the sub-Saharan African nations:

Suppose that surplus labor in a Pakistani village is used to build a medical clinic and dig several wells.This is an illustration of:

Income Inequality Poverty and Discrimination

Health Care

Immigration

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

The Balance of Payments, Exchange Rates, and Trade Deficits

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

The United States and the Global Economy

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