Deck 21: Economic Development

Question 1

On average, about half the labor force in developing countries works inagriculture, versus only about 3 percent in industrial market countries.

Answer 1

True

Question 2

The yardstick most often used to compare living standards across nations is

A)average production cost per unit
B)sales revenue per month
C)utility per capita
D)GDP per person
E)imports per year

Answer 2

D

Question 3

One likely reason that the country of Appleland is poor is that it

A)does not produce many goods and services
B)has highly educated and productive female workers
C)has a low birth rate
D)enjoys a low infant mortality rate
E)has a high literacy rate

Answer 3

A

Question 4

Which of the following does not describe the World Bank?

A)an economic development institution
B)affiliated with the United Nations
C)offers low­fee checking accounts to anyone in the world
D)estimates output per capita figures
E)uses output per capital figures to classify economies

Question 5

The yardstick most often used to compare living standards across nations is

A)average production cost per unit
B)sales revenue per month
C)utility per capita
D)output per capita
E)imports per year

Question 6

Industrial market countries are also referred to as

A)developing countries
B)low­income economies
C)middle­income economies
D)transitional economies
E)high­income economies

Question 7

A trend in developing countries is that

A)the birth rate during a typical woman's lifetime has increased from three to six children
B)attitudes toward family size are changing
C)when women have employment opportunities outside the home, fertility rates increase
D)as women become better educated, they earn less
E)as women become less educated, they tend to have fewer children

Question 8

Which of the following groups has the highest infant mortality rate?

A)middle­income economies
B)low­income economies
C)high­income economies
D)Western European economies
E)all the world's economies

Question 9

There is a tremendous range in productive performance around the world.

Question 10

In 2011, high­income economies with only about one sixth of the world'spopulation produced more than half of the world's output.

Question 11

Differences in stages of development among countries are reflected in anumber of ways besides per capita income.

Question 12

If the country of Zorg has a birth rate of greater than 2.2 births per woman,it is likely that Zorg is an industrial market country.

Question 13

Throughout the world, poverty is greater among women than men,particularly women who head households.

Question 14

Compared to industrial market countries, developing countries usually have

A)exports consisting mostly of agricultural products and raw materials
B)faster population growth
C)higher unemployment
D)higher rates of illiteracy
E)All of the answers are correct

Question 15

If Gloria is woman in a developing country, then it is likely that

A)she is less educated than most men in her country
B)her brother has dropped out of high school, but not she has graduated
C)she has more employment opportunities and earns higher wages than her male classmates
D)she and other women will not have to work long hours in agriculture
E)she has special access to resources such as land, capital, and technology

Question 16

0Which of the following is not a country or region most likely to be amongindustrial market countries?

A)Western Europe
B)North American
C)Australia
D)South Asia
E)Japan

Question 17

Which of the following groups has the lowest life expectancy at birth?

A)middle­income economies
B)low­income economies
C)high­income economies
D)sub­Saharan African economies
E)all the world's economies

Question 18

Which of the following groups has the lowest malnutrition rate amongchildren less than 5 years of age?

A)middle­income economies
B)low­income economies
C)high­income economies
D)sub­Saharan African economies
E)all the world's economies

Question 19

Labor productivity depends on the

A)quality of the labor
B)the amount of capital
C)the amount of natural resources
D)the amount of other inputs, such as technology
E)All of the answers are correct

Question 20

Which of the following is a cause of higher birth rates in developingcountries?

A)Children are viewed as a source of farm labor
B)Children are viewed as economic and social security as the parents age
C)Higher child mortality rates engender higher birth rates
D)All the answers are correct
E)None of the answers is correct

Question 21

The average value added per U.S.farm worker is about __________ timesthat of farm workers in low­ and middle­income countries.

A)one half
B)one
C)ten
D)seventy­five
E)five hundred

Question 22

Which of the following is true?

A)In low­income countries, less than 5 percent of those 15 and older were illiterate in 2007
B)In middle­income countries, 17 percent of those 15 and older were illiterate in 2007
C)In high­income countries, 38 percent of those 15 and older were illiterate in 2007
D)Education bears little relationship to economic development in high income countries
E)Education is more important to the economic development of low income countries than it is to high
Income countries

Question 23

Laws, customs, conventions, and other institutional elements that sustain aneconomy fall under the category of

A)rules of the game
B)human capital
C)natural resources
D)financial institutions
E)capital infrastructure

Question 24

Production and exchange depend on an reliable infrastructure of

A)transportation
B)communication
C)sanitation
D)electricity
E)All of the answers are correct

Question 25

The country of Bananaland has an abundant supply of banana trees andtherefore must be a modern industrial economy.

Question 26

Social capital is

A)the shared values and trust that promote cooperation in the economy
B)the buildings and equipment used to produce goods and services
C)a government regulation aimed at improving health and safety
D)the accumulated knowledge, skill, and experience of the labor force
E)the owner's own or borrowed money invested in a business

Question 27

Which of the following statements best serves as a summary of the otherstatements?

A)Low income can mean poor nutrition during the formative years, which can retard mental and physical
Development
B)Low income and low productivity may reinforce each other in a cycle of poverty
C)Low productivity obviously results in low income
D)Low income means less saving and less saving means less investment in human and physical capital
E)Poverty can result in less education, less capital formation, a poor diet, and little health care

Question 28

Labor productivity depends on the

A)quality of the labor
B)the effectiveness of government
C)the proportion of the labor force that is unionized
D)the size of the economy
E)All of the answers are correct

Question 29

Unemployment is measured primarily in urban areas because in rural areasfarm work is usually an outlet for labor.

Question 30

Which of the following is not a developing country classified as a high­income economy because of possessing huge oil reserves?

A)United Arab Emirates
B)Chad
C)Qatar
D)Kuwait
E)Bahrain

Question 31

Labor productivity depends on the

A)the effectiveness of government
B)the availability of technology
C)the proportion of the labor force that is unionized
D)the size of the economy
E)All of the answers are correct

Question 32

In Zimbabwe, more than half the people are unemployed.

Question 33

If Eddie Li is a skilled worker employed in a low­skill job, he is

A)underemployed
B)unemployed
C)overemployed
D)fully employed
E)All the answers are correct

Question 34

Labor productivity depends on the

A)the effectiveness of government
B)the size of the economy
C)the proportion of the labor force that is unionized
D)the amount of capital
E)All of the answers are correct

Question 35

Education makes people more receptive to new ideas and methods, whichleads to economic development.

Question 36

Countries with reliable phone service have difficulty not onlycommunicating, but also reaping the benefits of other technology advances,such as the Internet.

Question 37

Sjen Mavago, the economics minister of the country of X­Marks­the­Spot,has concluded that entrepreneurs are unable to generate the kind of growththe country needs.Her decision to create state enterprises might bemotivated by the desire to

A)earn profit
B)provide jobs for friends and relatives of government officials
C)take risks
D)encourage a free market
E)limit government's role in the economy

Question 38

The group of countries more likely to have a high number of telephone linesper 1,000 people is

A)high­income countries
B)zero­income countries
C)infinite­income countries
D)low­income countries
E)middle­income countries

Question 39

In developing countries, it is not true that

A)banks are often viewed with suspicion
B)at the first sign of economic problems, many bank depositors withdraw their funds
C)because banks cannot rely on a continuous supply of deposits, banks cannot make loans for extended
Periods
D)if financial institutions fail to serve as intermediaries between savers and borrowers, the lack of funds for
Investment will make growth rates double
E)the credit provided by banks as a percent of total output is one fifth that in high­income countries

Question 40

In developing nations, the combined rate of urban and rural unemploymentor underemployment is about

A)1 percent
B)10 percent
C)20 percent
D)30 percent
E)80 percent

Question 41

Usually the poorest fifth of the population in a developing country receivesmore than 20 percent of the country's income.

Question 42

When a developing country relies on import substitution,

A)it sacrifices the gains from specialization and comparative advantage
B)replaces low­cost foreign goods with high­cost domestic goods
C)domestic producers, shielded from foreign competition, usually fail to become efficient
D)other countries often retaliate with their own trade restrictions
E)All of the answers are correct

Question 43

When a developing country relies on export promotion,

A)it concentrates on producing for its domestic market
B)it builds its technological and educational base and then can make more complex products for export
C)domestic producers have sufficient protection that they can afford to become inefficient
D)its government must intervene more in markets
E)None of the answers is correct

Question 44

All developed countries achieve their status as a result of large supplies ofnatural resources.

Question 45

One possible reason that the country of Whatsis is trapped in poverty is

A)a lack of mineral wealth
B)an honest and functional government
C)laws and regulations to help detect fiscal fraud
D)a free press
E)a civil war

Question 46

Developing countries must confront industrial countries' trade restrictions,such as tariffs and quotas.

Question 47

Developing countries

A)do not benefit from foreign aid
B)do not benefit from private investment
C)generate less than half of their annual flow of foreign exchange from exports
D)must acquire foreign exchange in order to pay for imports
E)need to decrease labor productivity

Question 48

Which of the following is not true about migration?

A)Migration plays an important role in the economies of developing countries
B)A major source of foreign exchange in some countries is the money sent home by migrants
C)Migration provides a valuable safety valve for poor countries
D)The best and brightest professionals are very unlikely to migrate to developed countries
E)Every year thousands of nurses migrate from countries such as Kenya and the Philippines to the
United States

Question 49

Export promotion has been more successful than import substitution.

Question 50

To escape poverty, a country needs

A)Western banks to report deposits by corrupt officials
B)to develop laws and regulations to ensure the transparent management of natural resources
C)special trade advantages
D)ten years of domestic peace
E)All of the answers are correct

Question 51

The bulk of exports from developed countries are

A)manufactured goods
B)primary products
C)agricultural goods
D)raw materials
E)raw sugar products

Question 52

Successful management of resource wealth is a poverty trap

Question 53

A problem for developing countries is that the prices of primary productsfluctuate more widely than do the prices of finished goods because

A)crop supply changes very little despite the weather
B)crop supply fluctuates with the weather
C)weather never varies
D)crops go in and out of fashion as new diets are developed
E)crop demand fluctuates with the weather

Question 54

Imagine that the best and the brightest professionals of the planet Venusmigrate to Earth to work.The upside of this brain drain is

A)the remittances sent home to Venus
B)getting rid of snooty Venetians
C)not being able to afford the modern machinery that will help the Venetians become more productive
D)decreased labor supply on Venus
E)increased income inequality on Venus

Question 55

An example of a poverty trap is

A)extended time periods without war
B)a lack of mineral wealth
C)a dysfunctional or corrupt government
D)laws and regulations to help detect fiscal fraud
E)None of the answers is correct

Question 56

If the country of Deficitland is experiencing trade deficits, they are morelikely to cut imports of

A)beef
B)cocoa
C)coffee
D)capital goods
E)soybeans

Question 57

The bulk of exports from developing countries are

A)manufactured goods
B)primary products
C)servcies
D)consumer goods
E)raw sugar products

Question 58

If there is a great deal of violence and uncertainty in the country of Crazico,people will be less willing to invest in their own future or in the future ofCrazico.

Question 59

At the end of the production chain that a typical economy moves up along is

A)raw material
B)agriculture
C)hunting and gathering
D)services
E)manufacturing

Question 60

Privatization is the process of turning government enterprises intoprivate enterprises in transitional economies.

Question 61

The economic system that includes private ownership of most resources andthe coordination of economic activity by price signals generated by marketforces is

A)capitalism
B)socialism
C)communism
D)mercantilism
E)progressivism

Question 62

Around the world, once­socialist countries have replaced central plans with

A)foreign aid
B)budgets
C)special interests
D)markets
E)capital equipment

Question 63

Output per capita is the most commonly used measure of the prosperity of anation.

Question 64

Disappointed with problems caused by being a recipient of foreign aid fromdonor governments, the country of Upsilon should consider

A)refusing all future offers of aid
B)privatizing of aid, such as receiving funds from private not­for­profit agencies
C)becoming a donor instead
D)seeking even more government­sponsored aid
E)All of the answers are correct

Question 65

Which of the following is true about foreign aid provided by the UnitedStates?

A)During the last four decades, the U.S.has provided less than $400 million in aid
B)Most U.S.aid has been coordinated by the Department of Defense
C)The U.S.Agency for International Development emphasizes short­range plans
D)The U.S.Agency for International Development concentrates primarily on health, education, and
Agriculture
E)Foreign aid is large part of the U.S.federal budget

Question 66

Soft budget constraints will lead to

A)inefficiency
B)quick responses to changes in supply and demand
C)good investment decisions
D)high product quality
E)managers eager to satisfy consumer demand rather than production quotas

Question 67

Which of the following does the country of Fuggedaboutit not have to beconcerned about?

A)choosing a system of resource ownership
B)allocating resources
C)earning a profit for its owners
D)providing individual incentives
E)answering the three economic questions

Question 68

Which of the following can help shape the incentive structure of the countryof Gammaland?

A)resource availability
B)prices
C)income
D)incentives
E)All of the answers are correct

Question 69

Studies by the World Bank have underscored the successes of countries thathave adopted trade liberalization policies.

Question 70

Most of the labor force in developing countries work in the low wagemanufacturing sector.

Question 71

A significant feature of developing countries is that they use their labor lessefficiently than developed countries.

Question 72

Foreign aid often becomes a source of discretionary funds that benefit poorpeople in developing countries and not the countries' leaders.

Question 73

Which of the following occurs when there was a shortage of supply in acentrally planned economy?

A)Central planners reduced the amount supplied to each sector
B)Shoppers waited in long lines at retail stores
C)Store shelves were empty
D)Shop operators expected "tips" or bribes for supplying scarce consumer goods
E)All of the answers are correct

Question 74

When foreign aid is tied to purchases of low­priced food from the donorcountry, farm prices can drop in the developing countries, hurting poorfarmers.

Question 75

Economic systems can be classified based on

A)the ownership of resources only
B)the ownership of resources, the types of crops grown, and the incentives used to motivate people
C)the way resources are allocated to produce goods and services and the incentives used to motivate
People only
D)the ownership of resources, the way resources are allocated to produce goods and services, and the
Incentives used to motivate people
E)the ownership of resources, the way resources are allocated to produce goods and services, and the
Average education of workers

Question 76

A reliable system of property rights and enforceable contracts areprerequisites for creating incentives that support a healthy market economy.

Question 77

In centrally planned economies, most prices are not

A)established by central planners
B)inflexible
C)set below the market­clearing level
D)based on consumer demand
E)the cause of shortages of supply

Question 78

A soft budget constraint applies when enterprises that earn profits distributethose profits to their private owners.

Question 79

Which of the following is not an example of an institution (rules of thegame)?

A)formal rules of behavior
B)government takeover of private corporations
C)a constitution
D)informal constraints on behavior
E)traditions

Question 80

Which of the following creates an obstacle to pursuing freer internationaltrade?

A)Consumers do not recognize their potential gains
B)Losses are widespread
C)Domestic producers do not recognize their potential losses
D)Government has plenty of political will and support to remove trade barriers
E)Consumers can easily organize to demand free trade