Question 1

Saving is a larger percentage of domestic output in DVCs than in IACs, but the saving is put to poor use.

Accepted Answer

A) True 
 B)False

Question 2

The creation of an adequate infrastructure in a nation is primarily the responsibility of the public sector.

Accepted Answer

A) True 
 B)False

Question 3

Which organization primarily makes and guarantees loans to developing nations for basic development projects such as the construction of dams, roads, and schools?

Accepted Answer

A)  The World Bank 
B)  The New Economic Order 
C)  The Federal Reserve System 
D)  The Committee on Economic Development 
A)  The World Bank 
B)  The New Economic Order 
C)  The Federal Reserve System 
D)  The Committee on Economic Development

Question 4

The "vicious circle of poverty" for developing nations can best be described by:

Accepted Answer

A)  Low levels of international trade that reduce exports and increase the dependence on imports 
B)  Low incomes that inhibit saving and the accumulation of real and human capital, making it difficult to increase productivity and income 
C)  A large government sector which reduces the availability of private investment spending but which increases macroeconomic stability 
D)  A lack of entrepreneurial talent that limits the formation of businesses and the development of private businesses 
A)  Low levels of international trade that reduce exports and increase the dependence on imports 
B)  Low incomes that inhibit saving and the accumulation of real and human capital, making it difficult to increase productivity and income 
C)  A large government sector which reduces the availability of private investment spending but which increases macroeconomic stability 
D)  A lack of entrepreneurial talent that limits the formation of businesses and the development of private businesses

Question 5

Which of the following would most help a developing country (DVC) break out of the vicious circle of poverty?

Accepted Answer

A)  More consumption 
B)  More food production 
C)  An increase in the birth rate 
D)  An increase in labor productivity 
A)  More consumption 
B)  More food production 
C)  An increase in the birth rate 
D)  An increase in labor productivity

Question 6

Some of the ways that industrially advanced countries (IACs) can help developing countries (DVCs) in achieving faster economic growth include the following, except:

Accepted Answer

A)  Expanding trade 
B)  Admitting in more temporary workers 
C)  Subsidizing their own agricultural sectors 
D)  Discouraging arms sales 
A)  Expanding trade 
B)  Admitting in more temporary workers 
C)  Subsidizing their own agricultural sectors 
D)  Discouraging arms sales

Question 7

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Accepted Answer

A) True 
 B)False

Question 8

Brazil, Russia, and Thailand are referred to as:

Accepted Answer

A)  Industrially advanced countries 
B)  Middle-income developing countries 
C)  Low-income developing countries 
D)  Command economies 
A)  Industrially advanced countries 
B)  Middle-income developing countries 
C)  Low-income developing countries 
D)  Command economies

Question 9

A developing nation may not experience an increase in the average standard of living even if it increases its output of goods and services because of:

Accepted Answer

A)  Land reform 
B)  Population growth 
C)  Underemployment and disguised unemployment 
D)  Capital-saving technology 
A)  Land reform 
B)  Population growth 
C)  Underemployment and disguised unemployment 
D)  Capital-saving technology

Question 10

Microfinance refers to:

Accepted Answer

A)  Small-size stock markets with very limited capitalization 
B)  A system of providing credit to small-business owners 
C)  Bond markets for governments of small nations 
D)  Deposits in small banks in developing nations 
A)  Small-size stock markets with very limited capitalization 
B)  A system of providing credit to small-business owners 
C)  Bond markets for governments of small nations 
D)  Deposits in small banks in developing nations

Question 11

The average per capita income in 2010 for low-income developing nations was:

Accepted Answer

A)  $580 
B)  $2,100 
C)  $1,240 
D)  $4,600 
A)  $580 
B)  $2,100 
C)  $1,240 
D)  $4,600

Question 12

If it is cheaper in the long-run to use a new metal plow that lasts a long time than an inferior wooden plow that needs to be replaced often, then this is an example of:

Accepted Answer

A)  A capital-using technology 
B)  A capital-saving technology 
C)  Capital consumption 
D)  Private capital flows 
A)  A capital-using technology 
B)  A capital-saving technology 
C)  Capital consumption 
D)  Private capital flows

Question 13

Microfinance can help directly support:

Accepted Answer

A)  Labor or workers 
B)  Local governments 
C)  Entrepreneurs 
D)  Consumers 
A)  Labor or workers 
B)  Local governments 
C)  Entrepreneurs 
D)  Consumers

Question 14

A study concludes that in DVCs rising incomes must first be achieved and only then will there be slower population growth. What view of DVC population growth would it be supporting?

Accepted Answer

A)  Traditional view 
B)  Peasant agriculture view 
C)  The will-to-develop view 
D)  Demographic transition view 
A)  Traditional view 
B)  Peasant agriculture view 
C)  The will-to-develop view 
D)  Demographic transition view

Question 15

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 16

The average annual rate of population increase in the Philippines from 2000 to 2010 was about 2 percent. Based on this rate of growth, the population of the Philippines will double in about:

Accepted Answer

A)  7 years 
B)  11 years 
C)  35 years 
D)  46 years 
A)  7 years 
B)  11 years 
C)  35 years 
D)  46 years

Question 17

Which of the following is most characteristic of developing nations?

Accepted Answer

A)  A small percentage of the labor force in agriculture 
B)  A relatively equitable distribution of income 
C)  Low levels of labor productivity 
D)  Low rates of population growth 
A)  A small percentage of the labor force in agriculture 
B)  A relatively equitable distribution of income 
C)  Low levels of labor productivity 
D)  Low rates of population growth

Question 18

When technological advances are of the capital-using kind, it is possible for an economy to increase its productivity without any net investment in capital goods.

Accepted Answer

A) True 
 B)False

Question 19

The population growth rate of the DVCs (developing countries) as a group in recent decades has been:

Accepted Answer

A)  Steady 
B)  Declining 
C)  Rising modestly 
D)  Rising rapidly 
A)  Steady 
B)  Declining 
C)  Rising modestly 
D)  Rising rapidly

Question 20

Which of the following is a recommended policy for industrially advanced countries to adopt to foster economic growth in DVCs?

Accepted Answer

A)  Admitting more temporary workers from DVCs 
B)  Reducing the amount of debt relief for DVCs to make them less dependent 
C)  Eliminating loans from the World Bank because it encourages bureaucracy 
D)  Eliminating financial control of central banks where they have been established 
A)  Admitting more temporary workers from DVCs 
B)  Reducing the amount of debt relief for DVCs to make them less dependent 
C)  Eliminating loans from the World Bank because it encourages bureaucracy 
D)  Eliminating financial control of central banks where they have been established

Exam 22: The Economics of Developing Countries

Saving is a larger percentage of domestic output in DVCs than in IACs, but the saving is put to poor use.

The creation of an adequate infrastructure in a nation is primarily the responsibility of the public sector.

Which organization primarily makes and guarantees loans to developing nations for basic development projects such as the construction of dams, roads, and schools?

The "vicious circle of poverty" for developing nations can best be described by:

Which of the following would most help a developing country (DVC) break out of the vicious circle of poverty?

Some of the ways that industrially advanced countries (IACs) can help developing countries (DVCs) in achieving faster economic growth include the following, except:

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Brazil, Russia, and Thailand are referred to as:

A developing nation may not experience an increase in the average standard of living even if it increases its output of goods and services because of:

Microfinance refers to:

The average per capita income in 2010 for low-income developing nations was:

If it is cheaper in the long-run to use a new metal plow that lasts a long time than an inferior wooden plow that needs to be replaced often, then this is an example of:

Microfinance can help directly support:

A study concludes that in DVCs rising incomes must first be achieved and only then will there be slower population growth. What view of DVC population growth would it be supporting?

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

The average annual rate of population increase in the Philippines from 2000 to 2010 was about 2 percent. Based on this rate of growth, the population of the Philippines will double in about:

Which of the following is most characteristic of developing nations?

When technological advances are of the capital-using kind, it is possible for an economy to increase its productivity without any net investment in capital goods.

The population growth rate of the DVCs (developing countries) as a group in recent decades has been:

Which of the following is a recommended policy for industrially advanced countries to adopt to foster economic growth in DVCs?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role 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

Filters