Question 1

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) All of the above
F) A) and D)

Question 2

Avenues for the government to foster economic growth and development include the following, except:

Accepted Answer

A)   Nationalization and protection of domestic industries
B)   Establishing the rule of law and protection of property rights
C)   Building infrastructure and technological support
D)   Building human capital and entrepreneurshipE) All of the above
F) A) and D)

Question 3

What factor contributes to the weak economic growth in DVCs?

Accepted Answer

A)   An increase in labor productivity in DVCs
B)   A decrease in international debts of DVCs
C)   An increase in the rate of saving in a DVC
D)   A decrease in the prices of DVC natural resourcesE) B) and C)
F) A) and B)

Question 4

The levels of national income per capita among developing countries (DVCs)  are:

Accepted Answer

A)   All within a narrow range
B)   Widely varied
C)   All growing rapidly
D)   About half of those of industrially advanced countries (IACs) E) C) and D)
F) All of the above

Question 5

A new fertilizer that is better suited to a nation's topography and climate is an example of a technological advance that is:

Accepted Answer

A)   Capital-using
B)   Capital-saving
C)   Capital-intensive
D)   An in-kind investmentE) A) and B)
F) All of the above

Question 6

If the per capita incomes of DVCs (developing countries)  grew at the same annual rate as those of IACs (industrially advanced countries) , then the absolute income gap between rich and poor nations over the years will:

Accepted Answer

A)   Narrow
B)   Widen
C)   Stay the same
D)   ReverseE) A) and B)
F) A) and C)

Question 7

Human resources in the poorest DVCs have the following characteristics, except:

Accepted Answer

A)   Populations are large
B)   Unemployment and under-employment are widespread
C)   Population growth is low
D)   Labor productivity is lowE) A) and D)
F) None of the above

Question 8

One essential factor for economic growth is:

Accepted Answer

A)   Increasing population growth
B)   Expanding the role of government
C)   Using existing resources more efficiently
D)   Expanding tax-credits for business investmentE) None of the above
F) B) and D)

Question 9

The diversion of surplus labor in agriculture to the production of schools or roads in developing countries is described as:

Accepted Answer

A)   Land reform
B)   The brain drain
C)   In-kind investment
D)   A capital-using technological advanceE) C) and D)
F) None of the above

Question 10

One recommended policy that IACs could adopt to help DVCs is to recruit and hire skilled workers from DVCs for businesses in IACs.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)   25%
B)   50%
C)   70%
D)   90%E) A) and B)
F) All of the above

Question 12

The World Bank seeks to:

Accepted Answer

A)   Provide financial backing for the work of the International Monetary Fund
B)   Maintain stable exchange rates in the currencies of developing countries
C)   Assist developing countries in achieving economic growth
D)   Maximize its profits for its worldwide shareholdersE) None of the above
F) A) and D)

Question 13

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 consumptionE) B) and C)
F) A) and C)

Question 14

What is the immigration problem for DVCs?

Accepted Answer

A)   Too many people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the most productive DVC workers
B)   Too many people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the least productive DVC workers
C)   Too few people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the most productive DVC workers
D)   Too few people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the least productive DVC workersE) A) and B)
F) A) and C)

Question 15

One policy recommended by most economists for promoting economic growth in DVCs is the nationalization and protection of domestic industries.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

Accepted Answer

A)   The use of capital-saving technology
B)   Development of natural resources
C)   Widespread political corruption
D)   An increase in foreign aidE) A) and B)
F) A) and C)

Question 17

The corruption and poor administration that are common to the public sectors of many DVCs suggest that government may not be very effective in promoting economic growth.

Accepted Answer

A) True 
 B)False

Question 18

Assume that the real output of a developing nation increases from $120 billion to $140 billion while its population expands from 100 to 110 million. As a result, real income per capita has increased by about:

Accepted Answer

A)   $56 per person
B)   $64 per person
C)   $72 per person
D)   $88 per personE) None of the above
F) A) and D)

Question 19

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) A) and D)
F) A) and C)

Question 20

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 investmentE) C) and D)
F) B) and C)

Exam 22: The Economics of Developing Countries

The levels of national income per capita among developing countries (DVCs) are:

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The corruption and poor administration that are common to the public sectors of many DVCs suggest that government may not be very effective in promoting economic growth.

Correct AnswerverifiedShow Answer

The World Bank seeks to:

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One recommended policy that IACs could adopt to help DVCs is to recruit and hire skilled workers from DVCs for businesses in IACs.

Correct AnswerverifiedShow Answer

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Human resources in the poorest DVCs have the following characteristics, except:

Correct AnswerverifiedShow Answer

Avenues for the government to foster economic growth and development include the following, except:

Correct AnswerverifiedShow Answer

One policy recommended by most economists for promoting economic growth in DVCs is the nationalization and protection of domestic industries.

Correct AnswerverifiedShow Answer

What factor contributes to the weak economic growth in DVCs?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A new fertilizer that is better suited to a nation's topography and climate is an example of a technological advance that is:

Correct AnswerverifiedShow Answer

If the per capita incomes of DVCs (developing countries) grew at the same annual rate as those of IACs (industrially advanced countries) , then the absolute income gap between rich and poor nations over the years will:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume that the real output of a developing nation increases from $120 billion to $140 billion while its population expands from 100 to 110 million. As a result, real income per capita has increased by about:

Correct AnswerverifiedShow Answer

One essential factor for economic growth is:

Correct AnswerverifiedShow Answer

What is the immigration problem for DVCs?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The diversion of surplus labor in agriculture to the production of schools or roads in developing countries is described as:

Correct AnswerverifiedShow Answer

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