Question 1

Inadequate healthcare and disease treatment impede development for all of the following reasons except:

Accepted Answer

A) they contribute to overpopulation. 
B) they reduce the ability of a person to work. 
C) they reduce the ability of a person to care for others. 
D) developing countries lack the resources and infrastructure to deal with these problems.

Question 2

If a currency is convertible for the current account, then it is fully convertible.

Accepted Answer

A) True 
 B)False

Question 3

If political instability and corruption could be eliminated, economic growth would increase in most developing countries.

Accepted Answer

A) True 
 B)False

Question 4

In the early 1990s, Serbia, a developing country, experienced hyperinflation because its central bank increased the money supply too rapidly.Serbia's central bank most likely adopted this monetary policy because:

Accepted Answer

A) it didn't care about inflation. 
B) it believed that its actions would not trigger inflation. 
C) the Serbian government granted independence to the central bank. 
D) the Serbian government had no other way to finance its expenditures.

Question 5

According to Hernando De Soto, a Peruvian economist, it takes 13 to 25 years and 168 steps in order to have a house registered in the Philippines.In Haiti, it takes around 12 years and 111 visits to officials to formalize a business.The costs in terms of time and financial resources to have the property right over a home or a business have promoted the development of informal sectors or "extra-legal" sectors in various developing countries.The existence of a large informal sector in numerous developing countries is an example of:

Accepted Answer

A) corruption. 
B) a lack of appropriate institutions. 
C) political instability. 
D) overpopulation.

Question 6

The expectation of greater inflation resulting from the government's creation of money to finance budget deficits often results in a:

Accepted Answer

A) higher nominal demand for goods. 
B) lower money velocity. 
C) less inflationary pressure. 
D) less rapid money growth.

Question 7

Political instability is an impediment to development mainly because it:

Accepted Answer

A) undermines both domestic and foreign investment in a developing country. 
B) produces excessive levels of domestic saving. 
C) redistributes income. 
D) creates cultural and social differences among groups in developing countries.

Question 8

Which of the following is not an obstacle to development?

Accepted Answer

A) Political instability 
B) Corruption 
C) Overpopulation 
D) Excessive investment

Question 9

Foreign aid:

Accepted Answer

A) is an important source of funding for investment in most developing countries. 
B) does not contribute much to domestic investment in most developing countries. 
C) is largely wasted in most developing countries because it comes with no strings attached. 
D) provided by developed countries to developing countries represents about 10 percent of the GDP of developed countries.

Question 10

Developing countries place:

Accepted Answer

A) greater emphasis on both development and growth than developed countries. 
B) greater emphasis on development and less emphasis on growth than developed countries. 
C) greater emphasis on growth and less emphasis on development than developed countries. 
D) less emphasis on both growth and development than developed countries.

Question 11

At the end of the Korean War, South Korea was one of the poorest countries in the world.Fifty years later, it is now considered a developed country.Which of the following phenomena is most likely to explain South Korea's development over the last 50 years?

Accepted Answer

A) Credentialism 
B) Brain drain 
C) Infrastructure investment 
D) Increased competition for investment among developing countries

Question 12

Relative to developed economies, budget deficits are:

Accepted Answer

A) more likely in developing economies. 
B) less likely in developing economies. 
C) equally likely developing economies. 
D) politically less acceptable in developing countries.

Question 13

On January 1, 2001, El Salvador "dollarized" its economy.The U.S.dollar circulated throughout the country along with the Salvadoran colon for the first year.By the end of 2002 the official currency circulating in this economy was the U.S.dollar.El Salvador abandoned its own currency and adopted the currency of the United States because:

Accepted Answer

A) with dollars, monetary policy would be more effective at offsetting demand shocks in the economy. 
B) the government would no longer be able to finance deficits by printing money, and inflation would be under control. 
C) the government would still be able to finance deficits by printing U.S.dollars, and inflation would be under control. 
D) the government would still be able to run deficits by printing money.

Question 14

Developing countries, like many developed countries, have a dual economy.

Accepted Answer

A) True 
 B)False

Question 15

The normative economic goals of developing countries:

Accepted Answer

A) are the same as those of developed countries. 
B) focus primarily on achieving economic stability. 
C) focus primarily on achieving an equitable distribution of income. 
D) focus primarily on meeting basic needs.

Question 16

In general, the IMF provides developing countries with:

Accepted Answer

A) loans and lets these countries decide how the loans will be used. 
B) loans but only if the government adopts certain policies specified by the IMF in return. 
C) technical advice but does not provide them with loans. 
D) neither loans nor technical advice.

Question 17

With full exchange rate convertibility individuals can:

Accepted Answer

A) not exchange their currency for the currency of any other country. 
B) exchange their currency for the currency of any other country, but only to purchase goods produced in other countries. 
C) exchange their currency for the currency of any other country, but only to purchase assets from other countries. 
D) exchange their currency for the currency of any other country for any purpose they choose.

Question 18

In a dual economy with limited currency convertibility:

Accepted Answer

A) both the traditional and international sectors tend to be dollarized. 
B) only the traditional sector tends to be dollarized. 
C) only the international sector tends to be dollarized. 
D) neither the traditional nor the international sector tends to be dollarized.

Question 19

Developing countries tend to focus more on the goal of economic growth than developed countries.

Accepted Answer

A) True 
 B)False

Question 20

Educational policy in most developing countries focuses too much on primary and secondary education and not enough on higher education.

Accepted Answer

A) True 
 B)False

Exam 38: Macro Policy in Developing Countries

Inadequate healthcare and disease treatment impede development for all of the following reasons except:

If a currency is convertible for the current account, then it is fully convertible.

If political instability and corruption could be eliminated, economic growth would increase in most developing countries.

In the early 1990s, Serbia, a developing country, experienced hyperinflation because its central bank increased the money supply too rapidly.Serbia's central bank most likely adopted this monetary policy because:

The expectation of greater inflation resulting from the government's creation of money to finance budget deficits often results in a:

Political instability is an impediment to development mainly because it:

Which of the following is not an obstacle to development?

Foreign aid:

Developing countries place:

At the end of the Korean War, South Korea was one of the poorest countries in the world.Fifty years later, it is now considered a developed country.Which of the following phenomena is most likely to explain South Korea's development over the last 50 years?

Relative to developed economies, budget deficits are:

Developing countries, like many developed countries, have a dual economy.

The normative economic goals of developing countries:

In general, the IMF provides developing countries with:

With full exchange rate convertibility individuals can:

In a dual economy with limited currency convertibility:

Developing countries tend to focus more on the goal of economic growth than developed countries.

Educational policy in most developing countries focuses too much on primary and secondary education and not enough on higher education.