Question 1

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 percentE) All of the above
F) C) and D)

Question 2

A highly active role by government may be needed to promote economic growth in low-income DVCs because of

Accepted Answer

A)   a lack of infrastructure.
B)   rigid law enforcement in the country.
C)   excessive local entrepreneurship.
D)   all these reasons.E) A) and C)
F) C) and D)

Question 3

Because families can afford to have more children, population growth is greater in the IACs than in the DVCs.

Accepted Answer

A) True 
 B)False

Question 4

To be classified as a low-income developing country, annual per capita income in 2014 needed to be

Accepted Answer

A)   $1,045 or less.
B)   $628 or less.
C)   $2,018 or less.
D)   $925 or less.E) All of the above
F) B) and C)

Question 5

Which of the following is a factor limiting saving in DVCs?

Accepted Answer

A)   the lack of foreign aid and loans from the World Bank
B)   Governments control the banking system and set low interest rates.
C)   the flight of private savings to investments in IACs, where there is less risk
D)   Those who do save make their savings available only to their families, who use it for consumption.E) B) and C)
F) A) and B)

Question 6

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following would be an example of direct foreign investment in DVCs?

Accepted Answer

A)   a grant from the World Bank to build an irrigation project in Kenya
B)   the financing of a new chemical plant in Peru by a German company
C)   a low-interest loan from the U.S. government to Turkey to purchase military hardware
D)   a loan from the Japanese government to the Indonesian government to pay for electronic equipmentE) None of the above
F) A) and B)

Question 8

The World Bank is the organization to which DVCs turn as a "last-resort" lending agency for projects that private institutions will not fund.

Accepted Answer

A) True 
 B)False

Question 9

Capital flight from DVCs (developing countries) tends to offset much of the foreign loans and aid that they receive from IACs (industrially advanced countries).

Accepted Answer

A) True 
 B)False

Question 10

An increasing share of the private capital flows to DVCs in recent years has been in the form of

Accepted Answer

A)   interest-free government loans.
B)   educational and training assistance.
C)   direct foreign investment.
D)   bank loans.E) All of the above
F) A) and B)

Question 11

Economists would most likely suggest that advanced nations can best assist in the economic development of developing nations by

Accepted Answer

A)   increasing the amount of military aid to strengthen the government's role in providing law and order.
B)   increasing trade barriers so that less-developed nations will become more self-sufficient.
C)   reducing trade barriers and increasing the amount of private and public capital.
D)   decreasing the amounts of private capital or foreign aid to reduce the level of neocolonialism.E) B) and D)
F) B) and C)

Question 12

The role of government in fostering economic growth in DVCs has been criticized because

Accepted Answer

A)   most governments operate as dictatorships.
B)   there is often poor administration and corruption in government.
C)   government is generally supportive of business at the expense of labor.
D)   governments have adopted the unpopular method of forced savings to stimulate investment.E) B) and C)
F) All of the above

Question 13

A reason for placing special emphasis on capital accumulation in developing countries is the high

Accepted Answer

A)   level of adult illiteracy.
B)   productivity of workers in DVCs.
C)   marginal benefits of capital goods.
D)   level of import quotas and tariffs.E) All of the above
F) A) and C)

Question 14

Which of the following is not part of a nation's infrastructure?

Accepted Answer

A)   communications facilities
B)   roads, highways, and bridges
C)   the electrical power system
D)   industrial plants and equipmentE) B) and C)
F) None of the above

Question 15

The World Bank

Accepted Answer

A)   is also known as the International Monetary Fund (IMF) .
B)   lends money to developing nations for basic infrastructure projects such as dams, irrigation, health and sanitation, communications, and transportation.
C)   is an affiliate of the World Trade Organization (WTO) .
D)   provides subsidies to private firms so they can improve their wages and working conditions.E) A) and B)
F) A) and D)

Question 16

Suppose that surplus labor in a Pakistani village is used to build a medical clinic and dig several wells. This is an illustration of

Accepted Answer

A)   foreign aid.
B)   capital-saving investment.
C)   in-kind investment.
D)   technological advance.E) B) and C)
F) A) and D)

Question 17

Which of the following factors contributes most to the high per capita incomes in developed nations?

Accepted Answer

A)   high rates of population growth
B)   high rates of economic growth
C)   low rates of investment
D)   low rates of savingE) C) and D)
F) A) and B)

Question 18

The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.

Accepted Answer

A) True 
 B)False

Question 19

The demographic transition concept suggests that

Accepted Answer

A)   effective birth control is the primary prerequisite of DVC income growth.
B)   income growth must first occur before DVC birth rates will decline.
C)   children are economic assets in the IACs but economic liabilities in the DVCs.
D)   the IACs will have higher birth rates than the DVCs.E) B) and C)
F) All of the above

Question 20

Which of the following is characteristic of DVCs?

Accepted Answer

A)   A large percentage of the labor force is in agriculture.
B)   There are high levels of saving and investment.
C)   They have high labor productivity.
D)   There are high levels of training.E) A) and B)
F) A) and C)

Exam 28: The Economics of Developing Countries

Which of the following would be an example of direct foreign investment in DVCs?

Correct AnswerverifiedShow Answer

The World Bank is the organization to which DVCs turn as a "last-resort" lending agency for projects that private institutions will not fund.

Correct AnswerverifiedShow Answer

To be classified as a low-income developing country, annual per capita income in 2014 needed to be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following factors contributes most to the high per capita incomes in developed nations?

Correct AnswerverifiedShow Answer

The demographic transition concept suggests that

Correct AnswerverifiedShow Answer

The role of government in fostering economic growth in DVCs has been criticized because

Correct AnswerverifiedShow Answer

A highly active role by government may be needed to promote economic growth in low-income DVCs because of

Correct AnswerverifiedShow Answer

Which of the following is a factor limiting saving in DVCs?

Correct AnswerverifiedShow Answer

Economists would most likely suggest that advanced nations can best assist in the economic development of developing nations by

Correct AnswerverifiedShow Answer

The World Bank

Correct AnswerverifiedShow Answer

A reason for placing special emphasis on capital accumulation in developing countries is the high

Correct AnswerverifiedShow Answer

An increasing share of the private capital flows to DVCs in recent years has been in the form of

Correct AnswerverifiedShow Answer

The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.

Correct AnswerverifiedShow Answer

Suppose that surplus labor in a Pakistani village is used to build a medical clinic and dig several wells. This is an illustration of

Correct AnswerverifiedShow Answer

Which of the following is characteristic of DVCs?

Correct AnswerverifiedShow Answer

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Correct AnswerverifiedShow Answer

Which of the following is not part of a nation's infrastructure?

Correct AnswerverifiedShow Answer

Because families can afford to have more children, population growth is greater in the IACs than in the DVCs.

Correct AnswerverifiedShow Answer

Capital flight from DVCs (developing countries) tends to offset much of the foreign loans and aid that they receive from IACs (industrially advanced countries).

Correct AnswerverifiedShow Answer

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