Question 1

Capital ﬂight refers to the fact that many DVCs must use their export earnings to pay interest on
their outstanding external debts.

Accepted Answer

A) True 
 B)False  False

Question 2

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  True

Question 3

It is sometimes diﬃcult to transfer the advanced technologies of the industrialized nations to the DVCs because

Accepted Answer

A)   the technologies of the IACs are frequently based on relatively expensive labor and relatively abundant capital.
B)   the resource endowments of the IACs and the DVCs are highly similar.
C)   international patent laws prohibit such transfers.
D)   the technologies of the IACs are frequently based on relatively cheap labor and relatively expensive capital. A

Question 4

The DVCs are

Accepted Answer

A)   located primarily in Northern Europe.
B)   located primarily in Western Europe.
C)   located primarily in Africa, Asia, and Latin America.
D)   more or less evenly distributed over the various continents.

Question 5

An advantage of direct foreign investment (compared to foreign loans) is that management skill and
technological knowledge often accompany such capital ﬂows.

Accepted Answer

A) True 
 B)False

Question 6

If IACs admit more temporary workers from DVCs, will it help DVCs? Explain.

Accepted Answer

The answer of If IACs admit more temporary workers from...

Question 7

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

Accepted Answer

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

Question 8

Describe the main characteristics of direct foreign aid from IACs to DVCs.

Accepted Answer

The answer of Describe the main characteristics of direct foreign...

Question 9

Which two of the following countries had the best score in the Corruption Perceptions Index in 2015?

Accepted Answer

A)   Japan and Spain
B)   China and Russia
C)   United States and Canada
D)   Denmark and Singapore

Question 10

Large agricultural subsidies for food and ﬁber in IACs hurt the economies of the DVCs by

Accepted Answer

A)   causing higher prices for imported food products.
B)   lowering saving rates in the DVCs.
C)   encouraging "brain drains" from the DVCs.
D)   reducing world agricultural prices and thus export income of the DVCs.

Question 11

What is capital ﬂight?

Accepted Answer

The answer of What is capital ﬂight?...

Question 12

The poorest 20 percent of the world's population receive what percentage of world income?

Accepted Answer

A)   less than 2 percent
B)   about 4 percent
C)   around 8 percent
D)   close to 10 percent

Question 13

Which of these sets of nations consists of low-income developing nations?

Accepted Answer

A)   Brazil, Australia, and South Africa
B)   Burundi, Madagascar, and Sierra Leone
C)   Canada, Switzerland, and France
D)   Germany, South Korea, and Mexico

Question 14

Trade barriers that restrict imports from developing countries tend to be

Accepted Answer

A)   highest in the capital goods and technology sectors of those economies.
B)   lowest in the labor-intensive manufacturing sectors of those economies.
C)   lowest for those products in which DVCs have a comparative advantage.
D)   highest for those products in which DVCs have a comparative advantage.

Question 15

In 2017, the United States had about ___ percent of the world's population and produced about ___ percent of the world?s output.

Accepted Answer

A)   20; 30
B)   3.6; 31
C)   10; 28
D)   4.4; 24

Question 16

State industries are notoriously poor "incubators" for the development of proﬁt-focused, entrepreneurial persons who may leave the ﬁrm to set up their own businesses. This statement is an
Argument in favor of

Accepted Answer

A)   free immigration and emigration.
B)   privatizing state industries.
C)   central planning.
D)   free trade.

Question 17

(Last Word) Early experience with conditional cash transfers has revealed that

Accepted Answer

A)   most of these cash transfers available go unused because parents don?t want to fulﬁll the requirements.
B)   there is no signiﬁcant improvement in nutrition and health compared to nonrecipients.
C)   they encourage school enrollment, but poor-quality schools limit the ability to lift people out of poverty.
D)   the resulting improvements in education and health give the recipients a signiﬁcant earnings advantage over nonrecipients.

Question 18

In 2005,

Accepted Answer

A)   the G8 nations canceled $55 billion in debt owed by developing nations.
B)   both direct private investment and government-provided foreign aid to the DVCs increased.
C)   both direct private investment and government-provided foreign aid to the DVCs decreased.
D)   direct private investment to the DVCs decreased, and government-provided foreign aid increased.

Question 19

Foreign aid to the DVCs has been criticized

Accepted Answer

A)   because it may generate economic dependence on the IACs.
B)   because it encourages the centralization of government power over the economy.
C)   because government corruption in the DVCs causes aid to be misused.
D)   for all of these reasons.

Question 20

The capricious universe view indicates that

Accepted Answer

A)   in the long run, "acts of God" have contained population growth and thus contributed to economic development.
B)   DVCs will obtain biological and chemical weapons and force the redistribution of world wealth.
C)   there is little or no correlation between one's efforts and the rewards he or she receives.
D)   international and civil wars have been the primary impediment to growth.

Exam 22: The Economics of Developing Countries

Capital ﬂight refers to the fact that many DVCs must use their export earnings to pay interest on their outstanding external debts.

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