Question 1

The levels of national income per capita among developing countries (DVCs) are:

Accepted Answer

A)  All within a narrow range 
B)  Widely varied 
C)  All growing rapidly 
D)  About half of those of industrially advanced countries (IACs) 
A)  All within a narrow range 
B)  Widely varied 
C)  All growing rapidly 
D)  About half of those of industrially advanced countries (IACs)

Question 2

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 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

The World Bank seeks to:

Accepted Answer

A)  Provide financial backing for the work of the International Monetary Fund 
B)  Maintain stable exchange rates in the currencies of developing countries 
C)  Assist developing countries in achieving economic growth 
D)  Maximize its profits for its worldwide shareholders 
A)  Provide financial backing for the work of the International Monetary Fund 
B)  Maintain stable exchange rates in the currencies of developing countries 
C)  Assist developing countries in achieving economic growth 
D)  Maximize its profits for its worldwide shareholders

Question 5

A new fertilizer that is better suited to a nation's topography and climate is an example of a technological advance that is:

Accepted Answer

A)  Capital-using 
B)  Capital-saving 
C)  Capital-intensive 
D)  An in-kind investment 
A)  Capital-using 
B)  Capital-saving 
C)  Capital-intensive 
D)  An in-kind investment

Question 6

Avenues for the government to foster economic growth and development include the following, except:

Accepted Answer

A)  Nationalization and protection of domestic industries 
B)  Establishing the rule of law and protection of property rights 
C)  Building infrastructure and technological support 
D)  Building human capital and entrepreneurship 
A)  Nationalization and protection of domestic industries 
B)  Establishing the rule of law and protection of property rights 
C)  Building infrastructure and technological support 
D)  Building human capital and entrepreneurship

Question 7

Over the next 15 years, what percentage of the world population increase will come from DVCs?

Accepted Answer

A)  25% 
B)  50% 
C)  70% 
D)  90% 
A)  25% 
B)  50% 
C)  70% 
D)  90%

Question 8

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 9

What factor contributes to the weak economic growth in DVCs?

Accepted Answer

A)  An increase in labor productivity in DVCs 
B)  A decrease in international debts of DVCs 
C)  An increase in the rate of saving in a DVC 
D)  A decrease in the prices of DVC natural resources 
A)  An increase in labor productivity in DVCs 
B)  A decrease in international debts of DVCs 
C)  An increase in the rate of saving in a DVC 
D)  A decrease in the prices of DVC natural resources

Question 10

Assume that the real output of a developing nation increases from $120 billion to $140 billion while its population expands from 100 to 110 million. As a result, real income per capita has increased by about:

Accepted Answer

A)  $56 per person 
B)  $64 per person 
C)  $72 per person 
D)  $88 per person 
A)  $56 per person 
B)  $64 per person 
C)  $72 per person 
D)  $88 per person

Question 11

The diversion of surplus labor in agriculture to the production of schools or roads in developing countries is described as:

Accepted Answer

A)  Land reform 
B)  The brain drain 
C)  In-kind investment 
D)  A capital-using technological advance 
A)  Land reform 
B)  The brain drain 
C)  In-kind investment 
D)  A capital-using technological advance

Question 12

What is the immigration problem for DVCs?

Accepted Answer

A)  Too many people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the most productive DVC workers 
B)  Too many people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the least productive DVC workers 
C)  Too few people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the most productive DVC workers 
D)  Too few people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the least productive DVC workers 
A)  Too many people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the most productive DVC workers 
B)  Too many people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the least productive DVC workers 
C)  Too few people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the most productive DVC workers 
D)  Too few people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the least productive DVC workers

Question 13

One essential factor for economic growth is:

Accepted Answer

A)  Increasing population growth 
B)  Expanding the role of government 
C)  Using existing resources more efficiently 
D)  Expanding tax-credits for business investment 
A)  Increasing population growth 
B)  Expanding the role of government 
C)  Using existing resources more efficiently 
D)  Expanding tax-credits for business investment

Question 14

If the per capita incomes of DVCs (developing countries) grew at the same annual rate as those of IACs (industrially advanced countries), then the absolute income gap between rich and poor nations over the years will:

Accepted Answer

A)  Narrow 
B)  Widen 
C)  Stay the same 
D)  Reverse 
A)  Narrow 
B)  Widen 
C)  Stay the same 
D)  Reverse

Question 15

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

Accepted Answer

A)  The use of capital-saving technology 
B)  Development of natural resources 
C)  Widespread political corruption 
D)  An increase in foreign aid 
A)  The use of capital-saving technology 
B)  Development of natural resources 
C)  Widespread political corruption 
D)  An increase in foreign aid

Question 16

Which of the following factors contributes most to the high per-capita incomes in developed nations?

Accepted Answer

A)  High rates of population growth 
B)  High rates of economic growth 
C)  Low rates of investment 
D)  Low rates of saving 
A)  High rates of population growth 
B)  High rates of economic growth 
C)  Low rates of investment 
D)  Low rates of saving

Question 17

Which of the following would be an example of direct foreign investment in DVCs?

Accepted Answer

A)  A grant from the World Bank to build an irrigation project in Kenya 
B)  The financing of a new chemical plant in Peru by a German company 
C)  A low-interest loan from the U.S. government to Turkey to purchase military hardware 
D)  A loan from the Japanese government to the Indonesian government to pay for electronic equipment 
A)  A grant from the World Bank to build an irrigation project in Kenya 
B)  The financing of a new chemical plant in Peru by a German company 
C)  A low-interest loan from the U.S. government to Turkey to purchase military hardware 
D)  A loan from the Japanese government to the Indonesian government to pay for electronic equipment

Question 18

Human resources in the poorest DVCs have the following characteristics, except:

Accepted Answer

A)  Populations are large 
B)  Unemployment and under-employment are widespread 
C)  Population growth is low 
D)  Labor productivity is low 
A)  Populations are large 
B)  Unemployment and under-employment are widespread 
C)  Population growth is low 
D)  Labor productivity is low

Question 19

The corruption and poor administration that are common to the public sectors of many DVCs suggest that government may not be very effective in promoting economic growth.

Accepted Answer

A) True 
 B)False

Question 20

One policy recommended by most economists for promoting economic growth in DVCs is the nationalization and protection of domestic industries.

Accepted Answer

A) True 
 B)False

Exam 22: The Economics of Developing Countries

The levels of national income per capita among developing countries (DVCs) are:

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

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

The World Bank seeks to:

A new fertilizer that is better suited to a nation's topography and climate is an example of a technological advance that is:

Avenues for the government to foster economic growth and development include the following, except:

Over the next 15 years, what percentage of the world population increase will come from DVCs?

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

What factor contributes to the weak economic growth in DVCs?

Assume that the real output of a developing nation increases from $120 billion to $140 billion while its population expands from 100 to 110 million. As a result, real income per capita has increased by about:

The diversion of surplus labor in agriculture to the production of schools or roads in developing countries is described as:

What is the immigration problem for DVCs?

One essential factor for economic growth is:

If the per capita incomes of DVCs (developing countries) grew at the same annual rate as those of IACs (industrially advanced countries), then the absolute income gap between rich and poor nations over the years will:

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

Which of the following factors contributes most to the high per-capita incomes in developed nations?

Which of the following would be an example of direct foreign investment in DVCs?

Human resources in the poorest DVCs have the following characteristics, except:

The corruption and poor administration that are common to the public sectors of many DVCs suggest that government may not be very effective in promoting economic growth.

One policy recommended by most economists for promoting economic growth in DVCs is the nationalization and protection of domestic industries.

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

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