Question 1

Which term refers to the strategy of producing domestically those goods that a country has been importing?

Accepted Answer

A)  Import substitution 
B)  Export promotion 
C)  Terms of trade 
D)  Late development

Question 2

In the second half of the twentieth century, import substitution was dominant in

Accepted Answer

A)  Latin America, India, and parts of Africa. 
B)  Africa. 
C)  Latin America. 
D)  Europe.

Question 3

The Gini Coefficient refers to the

Accepted Answer

A)  percentage breakdown of those living below and above the poverty line. 
B)  income ratio of the top and bottom fractions of society. 
C)  relative rise in income for certain segments of society. 
D)  absolute rise of a country's income.

Question 4

Which of the following is not an important function of the World Bank?

Accepted Answer

A)  Economic policy recommendations. 
B)  Lending programs. 
C)  Peacekeeping forces. 
D)  research on development issues.

Question 5

According to the Fair Labor Association's "Workplace Code of Conduct," which of the following ages is too young to work under any circumstance?

Accepted Answer

A)  15 
B)  14 
C)  13 
D)  16

Question 6

Discuss the benefits and risks with foreign aid. In what way does foreign aid help a country to develop and in what way does it hinder its development?

Accepted Answer

The answer of Discuss the benefits and risks with foreign...

Question 7

Which is NOT a strategy that allowed Germany to achieve development in the nineteenth century?

Accepted Answer

A)  Taxation 
B)  A first-rate education system 
C)  Protectionism 
D)  Central planning

Question 8

Which country has the second highest percentage of voting shares at the World Bank?

Accepted Answer

A)  Japan 
B)  Germany 
C)  United States 
D)  France

Question 9

After the Asian financial crisis of 1997-1998, East Asian economics were exposed for corrupt close connections. The term coined by this corruption was

Accepted Answer

A)  Asian Tigers. 
B)  crony capitalism. 
C)  The Asian Kittens. 
D)  Hong Kong capitalism.

Question 10

An economic effect whereby an increase in spending (for example, of funds provided to a country by a donor) produces an increase in national income and consumption greater than the initial amount spent is called the

Accepted Answer

A)  untied aid. 
B)  multiplier effect. 
C)  export-led growth effect. 
D)  network effect.

Question 11

Which of the following is not a part of the World Bank structure?

Accepted Answer

A)  The International Monetary Fund 
B)  International Bank for Reconstruction and Development 
C)  The International Development Association 
D)  The International Finance Corporation

Question 12

What is bilateral aid? Discuss some of the many problems often associated with such aid, particularly from the point of view of the receiving country. Provide examples where possible.

Accepted Answer

The answer of What is bilateral aid? Discuss some of...

Question 13

By the 1980s, donor countries and organizations had reached an understanding on development strategy that was based on the values of open economies and free trade. This was known as the

Accepted Answer

A)  Bretton Woods Agreement. 
B)  North American Free Trade Agreement. 
C)  International Monetary Fund Treaty. 
D)  Washington consensus.

Question 14

Purchasing power parity (PPP) is especially insightful because it takes into account

Accepted Answer

A)  the different costs of goods in different countries. 
B)  the percentage of a society living under conditions of poverty. 
C)  the absolute costs of living in any one country. 
D)  a relatively simple calculation of the cost of living.

Question 15

Although the price of oil and some commodities has increased in recent years, the price of most raw materials has declined. For countries that primarily produce raw materials, this development has led to

Accepted Answer

A)  declining terms of trade. 
B)  a rise in terms of trade. 
C)  opportunities to rely on inexpensive labor. 
D)  an increase in the export of raw materials.

Question 16

The International Bank for Reconstruction and Development (IBRD) focuses on __________, whereas the International Development Association (IDA) focuses on __________.

Accepted Answer

A)  middle-income countries and poorer countries considered to be a good risk in terms of repaying loans; the poorest countries, who may have considerable difficulty paying back any aid 
B)  the poorest countries, who may have considerable difficulty paying back any aid; middle-income countries and poorer countries considered to be a good risk in terms of repaying loans 
C)  middle-income countries who are considered to be a good risk; lower-income countries who are considered to be a good risk 
D)  lower income countries who are considered to be a good risk; lower-income countries who are considered to be a poor risk

Question 17

Interdependence and globalization have demonstrated that poverty in other countries can

Accepted Answer

A)  facilitate economic growth in the rich countries. 
B)  infuse stronger feelings of nationalism in the poor countries. 
C)  spill over from poor to rich countries through migration, crime, and health problems. 
D)  unite countries through international organizations.

Question 18

The early industrialists of the United States, Germany, and Japan relied heavily on

Accepted Answer

A)  free trade. 
B)  private investment. 
C)  protectionism. 
D)  democratic institutions.

Question 19

The export led growth countries pursued a policy of "going where the money is." This was referred to as

Accepted Answer

A)  investing capital in the rich countries of the world. 
B)  borrowing capital from rich countries. 
C)  producing and selling goods for the international market. 
D)  importing heavily from rich countries.

Question 20

In the second half of the twentieth century, export-led growth was dominant in

Accepted Answer

A)  Latin America. 
B)  Africa. 
C)  Europe. 
D)  East Asia.

Exam 12: The Problem of Global Inequality