Question 1

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.

Question 2

The most important growth obstacle common to all DVCs is the lack of desire to increase their standards of living.

Accepted Answer

A) True 
 B)False

Question 3

Most of the world's population lives in

Accepted Answer

A) North America. 
B) the DVCs. 
C) Western Europe. 
D) the IACs.

Question 4

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.

Question 5

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.

Question 6

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

Accepted Answer

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

Question 7

In 2014, the IACs (industrially advanced countries) had an average per capita income that was about 60 times as high as that of the low-income nations.

Accepted Answer

A) True 
 B)False

Question 8

The demographic transition view of population growth believes that slower population growth will lead to rising incomes.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Developing nations tend to have a large entrepreneurial class but not sufficient capital investment.

Accepted Answer

A) True 
 B)False

Question 11

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 12

In recent years, the governments of the IACs have

Accepted Answer

A) forgiven a portion of the debt owed by some low-income DVCs. 
B) substantially reduced foreign aid to the DVCs. 
C) substantially reduced their contributions to the World Bank. 
D) discouraged skilled DVC workers from emigrating to the IACs.

Question 13

Development experts are less enthusiastic than they used to be about three decades ago about the positive role of DVC governments in promoting economic growth in their less- developed nations because of the

Accepted Answer

A) corruption in government. 
B) availability of foreign aid. 
C) need for a greater tax collection. 
D) need for more public capital goods.

Question 14

One suggested policy that industrially advanced nations could adopt to foster economic growth in less-developed nations would be to

Accepted Answer

A) leave the responsibility to the World Bank. 
B) direct foreign aid to the poorest DVCs. 
C) recruit more skilled workers from DVCs. 
D) target the banking sector for the most help.

Question 15

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 would

Accepted Answer

A) narrow. 
B) widen. 
C) stay the same. 
D) reverse.

Question 16

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 17

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."

Question 18

The exports of the DVCs consist largely of

Accepted Answer

A) high-technology goods. 
B) raw materials and farm products. 
C) manufactured goods. 
D) services and financial capital.

Question 19

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.

Question 20

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.

Exam 19: The Economics of Developing Countries

Which of the following is a true statement?

The most important growth obstacle common to all DVCs is the lack of desire to increase their standards of living.

Most of the world's population lives in

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

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

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

In 2014, the IACs (industrially advanced countries) had an average per capita income that was about 60 times as high as that of the low-income nations.

The demographic transition view of population growth believes that slower population growth will lead to rising incomes.

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

Developing nations tend to have a large entrepreneurial class but not sufficient capital investment.

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

In recent years, the governments of the IACs have

Development experts are less enthusiastic than they used to be about three decades ago about the positive role of DVC governments in promoting economic growth in their less- developed nations because of the

One suggested policy that industrially advanced nations could adopt to foster economic growth in less-developed nations would be to

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 would

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.

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

The exports of the DVCs consist largely of

Industrially advanced countries can best help DVCs by

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