Question 1

Microcredit refers to

Accepted Answer

A)   small-size stock markets with very limited capitalization.
B)   a system of providing credit to small-business owners.
C)   bond markets for governments of small nations.
D)   deposits in small banks in developing nations.E) B) and C)
F) A) and D)

Question 2

The government of a DVC may force the economy to save by deliberately causing inflation. This policy is undesirable because inflation may

Accepted Answer

A)   distort investment away from productive facilities and toward luxury housing and precious metals.
B)   increase voluntary saving because the value of money is depreciating.
C)   contribute to a balance of trade surplus.
D)   entail all of these problems.E) A) and B)
F) A) and C)

Question 3

Which of the following IACs (industrially advanced countries)  gave the largest share of its GDP to foreign aid or development assistance to DVCs (developing countries)  in 2015?

Accepted Answer

A)   Sweden
B)   Japan
C)   United States
D)   GermanyE) A) and D)
F) A) and C)

Question 4

Which of the following countries had the highest per capita income (on a purchasing power parity basis)  in 2014?

Accepted Answer

A)   China
B)   United States
C)   Japan
D)   BrazilE) A) and C)
F) B) and D)

Question 5

Capital flight is a problem facing DVCs that involves the

Accepted Answer

A)   difficulty of sustaining skilled workers in the government sector of the DVC economies.
B)   transfer of private savings from DVCs to IACs.
C)   flight of agricultural workers from rural to urban areas, especially capital cities, to take advantage of better job opportunities.
D)   movement of capital goods from IACs to DVCs to avoid taxes.E) None of the above
F) B) and D)

Question 6

In recent years, U.S. foreign aid has been

Accepted Answer

A)   less than one-quarter of 1 percent of its output.
B)   about 1 percent of its output.
C)   about 3 percent of its output.
D)   about 5 percent of its output.E) A) and C)
F) A) and D)

Question 7

In 2014, Wal-Mart's annual revenues were greater than the national incomes of

Accepted Answer

A)   the United States.
B)   Germany.
C)   all but 26 nations.
D)   all nations except for the 5 largest ones.E) B) and C)
F) A) and D)

Question 8

Most of the DVCs find it difficult to accumulate capital goods because

Accepted Answer

A)   the terms of trade prohibit the inflow of private capital from the advanced nations.
B)   it is very difficult to restrict consumption and thus to free resources for capital goods production.
C)   domestic monetary policies designed to achieve price stability result in low interest rates, thereby discouraging investment.
D)   investment is interest inelastic in DVCs.E) B) and C)
F) A) and C)

Question 9

Most developing countries (DVCs)  exhibit a low level of

Accepted Answer

A)   illiteracy.
B)   population growth.
C)   life expectancy.
D)   infant mortality.E) A) and C)
F) None of the above

Question 10

Investment in-kind refers to the possibility that

Accepted Answer

A)   DVCs will invest for the purpose of becoming less dependent on world markets.
B)   a DVC will overinvest in industries in which it has a comparative advantage, disrupting its development program.
C)   newly established manufacturing firms may expand by reinvesting their profits.
D)   surplus labor in, say, agriculture can be diverted to the production of simple capital goods such as earthen dams.E) All of the above
F) A) and B)

Question 11

An economy's infrastructure refers to its

Accepted Answer

A)   public capital goods, such as roads, schools, and power facilities.
B)   financial and banking institutions.
C)   land and natural resources.
D)   surplus supplies of unskilled labor.E) B) and C)
F) C) and D)

Question 12

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

Accepted Answer

A)   Brazil, Australia, and South Africa
B)   Uganda, Madagascar, and Burkina Faso
C)   Canada, Switzerland, and France
D)   Germany, South Korea, and MexicoE) A) and B)
F) All of the above

Question 13

A suggested policy for industrially advanced countries to adopt to encourage economic growth in developing countries would be

Accepted Answer

A)   cutting debt relief for DVCs.
B)   directing foreign aid to the more affluent DVCs.
C)   restricting immigration of low-skilled workers from DVCs.
D)   reducing tariffs and import quotas on labor-intensive products.E) B) and C)
F) C) and D)

Question 14

Per capita incomes must first grow for birth rates to decline. This statement describes the

Accepted Answer

A)   human capital view of population growth.
B)   traditional view of population growth.
C)   capricious universe view.
D)   demographic transition view of population growth.E) A) and D)
F) C) and D)

Question 15

A major complaint of DVCs about foreign aid from IACs is that it

Accepted Answer

A)   is allocated just to the poorest nations.
B)   is equally borne by the donor nations.
C)   needs to be quantitatively larger for DVCs.
D)   takes too long a time to reach DVCs.E) B) and C)
F) A) and B)

Question 16

The exports of the DVCs consist largely of

Accepted Answer

A)   high-technology goods.
B)   raw materials and farm products.
C)   manufactured goods.
D)   services and financial capital.E) B) and C)
F) A) and B)

Question 17

If population is expanding at the same rate as real output,

Accepted Answer

A)   real per capita output will increase.
B)   real per capita output will decrease.
C)   real per capita output will remain unchanged.
D)   living standards will increase.E) A) and D)
F) A) and C)

Question 18

For DVC per capita incomes to rise, birth rates must first be reduced. This statement describes the

Accepted Answer

A)   human capital view of population growth.
B)   traditional view of population growth.
C)   capricious universe view.
D)   demographic transition view of population growth.E) None of the above
F) B) and C)

Question 19

The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S. aid programs.

Accepted Answer

A) True 
 B)False

Question 20

Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC. If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will

Accepted Answer

A)   remain unchanged at $19,000.
B)   increase by $760.
C)   decrease by $1,000.
D)   increase by $19,760.E) None of the above
F) A) and D)

Exam 28: The Economics of Developing Countries

In 2014, Wal-Mart's annual revenues were greater than the national incomes of

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The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S. aid programs.

Correct AnswerverifiedShow Answer

Investment in-kind refers to the possibility that

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The government of a DVC may force the economy to save by deliberately causing inflation. This policy is undesirable because inflation may

Correct AnswerverifiedShow Answer

Which of the following countries had the highest per capita income (on a purchasing power parity basis) in 2014?

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An economy's infrastructure refers to its

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Per capita incomes must first grow for birth rates to decline. This statement describes the

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A suggested policy for industrially advanced countries to adopt to encourage economic growth in developing countries would be

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Which of the following IACs (industrially advanced countries) gave the largest share of its GDP to foreign aid or development assistance to DVCs (developing countries) in 2015?

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

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For DVC per capita incomes to rise, birth rates must first be reduced. This statement describes the

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Most of the DVCs find it difficult to accumulate capital goods because

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Most developing countries (DVCs) exhibit a low level of

Correct AnswerverifiedShow Answer

Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC. If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will

Correct AnswerverifiedShow Answer

In recent years, U.S. foreign aid has been

Correct AnswerverifiedShow Answer

The exports of the DVCs consist largely of

Correct AnswerverifiedShow Answer

Microcredit refers to

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Capital flight is a problem facing DVCs that involves the

Correct AnswerverifiedShow Answer

A major complaint of DVCs about foreign aid from IACs is that it

Correct AnswerverifiedShow Answer

If population is expanding at the same rate as real output,

Correct AnswerverifiedShow Answer

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