Question 1

Which of the following countries had the worst score in the Corruption Perception Index in 2012?

Accepted Answer

A)  Italy 
B)  China 
C)  Mexico 
D)  Russia 
A)  Italy 
B)  China 
C)  Mexico 
D)  Russia

Question 2

A major criticism of foreign aid to developing nations is that it:

Accepted Answer

A)  Provides incentives to reduce the role of government 
B)  Is capital-using rather than capital-saving when it is spent 
C)  Encourages dependency rather than self-sustained growth 
D)  Leads to widespread underemployment and unemployment 
A)  Provides incentives to reduce the role of government 
B)  Is capital-using rather than capital-saving when it is spent 
C)  Encourages dependency rather than self-sustained growth 
D)  Leads to widespread underemployment and unemployment

Question 3

Capital flight is a problem facing DVCs that involves the:

Accepted Answer

A)  Difficulty of sustaining skilled workers in the government sector of the DVC economies 
B)  Transfer of private savings from DVCs to IACs 
C)  Flight of agricultural workers from rural to urban areas, especially capital cities, to take advantage of better job opportunities 
D)  Movement of capital goods from IACs to DVCs to avoid taxes 
A)  Difficulty of sustaining skilled workers in the government sector of the DVC economies 
B)  Transfer of private savings from DVCs to IACs 
C)  Flight of agricultural workers from rural to urban areas, especially capital cities, to take advantage of better job opportunities 
D)  Movement of capital goods from IACs to DVCs to avoid taxes

Question 4

The lack of an entrepreneurial class in developing nations tends to:

Accepted Answer

A)  Keep workers from migrating to cities from rural areas 
B)  Reduce the level of capital investment 
C)  Force the need for land reform 
D)  Keep governments stable 
A)  Keep workers from migrating to cities from rural areas 
B)  Reduce the level of capital investment 
C)  Force the need for land reform 
D)  Keep governments stable

Question 5

A large portion of foreign aid from IACs to DVCs is provided on the basis of:

Accepted Answer

A)  Economic considerations 
B)  Geographical considerations 
C)  Humanitarian considerations 
D)  Politico-military considerations 
A)  Economic considerations 
B)  Geographical considerations 
C)  Humanitarian considerations 
D)  Politico-military considerations

Question 6

An obstacle to economic growth in developing countries is:

Accepted Answer

A)  The limited demand for natural resources 
B)  The limited supply of capital goods 
C)  A decline in population growth 
D)  The low productivity of capital 
A)  The limited demand for natural resources 
B)  The limited supply of capital goods 
C)  A decline in population growth 
D)  The low productivity of capital

Question 7

In recent years, a greater proportion of private capital flows to DVCs has been direct foreign investment rather than loans to DVC governments.

Accepted Answer

A) True 
 B)False

Question 8

At the beginning of the year, one developing country (DVC) has a real income per capita of $800. In a developed country (IAC), the real income per capita is $30,000. Both countries experience a 4 percent growth rate for the year. At the end of the year, the absolute income gap between these two countries will have increased from $29,200 to:

Accepted Answer

A)  $30,368 
B)  $31,200 
C)  $30,120 
D)  $32,032 
A)  $30,368 
B)  $31,200 
C)  $30,120 
D)  $32,032

Question 9

The vicious circle of poverty in the poorest DVCs can also be expressed as:

Accepted Answer

A)  The rich get richer while the poor get poorer 
B)  Fate dealt the poor nations a bad hand 
C)  The poor nations stay poor because they are poor 
D)  Historical developments have oppressed the poor nations' incomes 
A)  The rich get richer while the poor get poorer 
B)  Fate dealt the poor nations a bad hand 
C)  The poor nations stay poor because they are poor 
D)  Historical developments have oppressed the poor nations' incomes

Question 10

The industrially advanced nations can assist developing nations by reducing trade barriers and by providing both private and public capital.

Accepted Answer

A) True 
 B)False

Question 11

Most economists agree that government efforts in economic development must be:

Accepted Answer

A)  Employed to substitute for private efforts 
B)  Designed to support private efforts 
C)  The sole driver of economic development 
D)  Kept at a minimum because we can always rely on markets 
A)  Employed to substitute for private efforts 
B)  Designed to support private efforts 
C)  The sole driver of economic development 
D)  Kept at a minimum because we can always rely on markets

Question 12

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 13

The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.

Accepted Answer

A) True 
 B)False

Question 14

One of the major objectives of the World Bank is to:

Accepted Answer

A)  Provide financial backing for the United Nations 
B)  Maximize its profits for its worldwide shareholders 
C)  Provide technical assistance to DVCs 
D)  Maintain stable exchange rates in IACs and DVCs 
A)  Provide financial backing for the United Nations 
B)  Maximize its profits for its worldwide shareholders 
C)  Provide technical assistance to DVCs 
D)  Maintain stable exchange rates in IACs and DVCs

Question 15

A suggested policy for industrially advanced countries to adopt to encourage economic growth in developing countries would be:

Accepted Answer

A)  Cutting debt relief for DVCs 
B)  Directing foreign aid to the more affluent DVCs 
C)  Restricting immigration of low-skilled workers from DVCs 
D)  Reducing tariffs and import quotas on labor-intensive products 
A)  Cutting debt relief for DVCs 
B)  Directing foreign aid to the more affluent DVCs 
C)  Restricting immigration of low-skilled workers from DVCs 
D)  Reducing tariffs and import quotas on labor-intensive products

Question 16

Which of the following is most characteristic of most developing nations?

Accepted Answer

A)  Roughly equal distribution of income among the population 
B)  High levels of labor productivity in agriculture 
C)  Low propensity to consume goods and services 
D)  Low levels of saving and investment 
A)  Roughly equal distribution of income among the population 
B)  High levels of labor productivity in agriculture 
C)  Low propensity to consume goods and services 
D)  Low levels of saving and investment

Question 17

Economists would most likely suggest that advanced nations can best assist in the economic development of developing nations by:

Accepted Answer

A)  Increasing the amount of military aid to strengthen the government's role in providing law and order 
B)  Increasing trade barriers so that less developed nations will become more self-sufficient 
C)  Reducing trade barriers and increasing the amount of private and public capital 
D)  Decreasing the amounts of private capital or foreign aid to reduce the level of neocolonialism 
A)  Increasing the amount of military aid to strengthen the government's role in providing law and order 
B)  Increasing trade barriers so that less developed nations will become more self-sufficient 
C)  Reducing trade barriers and increasing the amount of private and public capital 
D)  Decreasing the amounts of private capital or foreign aid to reduce the level of neocolonialism

Question 18

Industrially advanced countries can best help DVCs by:

Accepted Answer

A)  Directing requests from DVCs for aid to the World Bank 
B)  Using the International Monetary Fund to determine exchange rates in DVCs 
C)  Increasing management control over development projects 
D)  Adopting policies that expand trade with DVCs 
A)  Directing requests from DVCs for aid to the World Bank 
B)  Using the International Monetary Fund to determine exchange rates in DVCs 
C)  Increasing management control over development projects 
D)  Adopting policies that expand trade with DVCs

Question 19

Which characteristic is most typical of human resources in developing nations?

Accepted Answer

A)  A small population base 
B)  Low unemployment in urban areas 
C)  Low unemployment in rural areas 
D)  High unemployment in urban areas 
A)  A small population base 
B)  Low unemployment in urban areas 
C)  Low unemployment in rural areas 
D)  High unemployment in urban areas

Question 20

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

Exam 22: The Economics of Developing Countries

Which of the following countries had the worst score in the Corruption Perception Index in 2012?

A major criticism of foreign aid to developing nations is that it:

Capital flight is a problem facing DVCs that involves the:

The lack of an entrepreneurial class in developing nations tends to:

A large portion of foreign aid from IACs to DVCs is provided on the basis of:

An obstacle to economic growth in developing countries is:

In recent years, a greater proportion of private capital flows to DVCs has been direct foreign investment rather than loans to DVC governments.

The vicious circle of poverty in the poorest DVCs can also be expressed as:

The industrially advanced nations can assist developing nations by reducing trade barriers and by providing both private and public capital.

Most economists agree that government efforts in economic development must be:

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

The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.

One of the major objectives of the World Bank is to:

A suggested policy for industrially advanced countries to adopt to encourage economic growth in developing countries would be:

Which of the following is most characteristic of most developing nations?

Economists would most likely suggest that advanced nations can best assist in the economic development of developing nations by:

Industrially advanced countries can best help DVCs by:

Which characteristic is most typical of human resources in developing nations?

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

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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