Question 1

Which of the given nations would be high-income countries (IACs) , according to the World Bank?

Accepted Answer

A)  country C only
B)  countries B, C, and D
C)  countries B, C, D, and E
D)  countries B and CE) C) and D)
F) A) and B)

Question 2

Rapid population growth can be an obstacle to economic development

Accepted Answer

A)  because it can translate a relatively large increase in real output into a small increase in real output per capita.
B)  because more investment will be required to simply maintain the quantity of capital goods per person.
C)  because it may lead to the overutilization and therefore ecological degradation of farmland.
D)  for all of these reasons.E) None of the above
F) A) and B)

Question 3

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

Accepted Answer

A)  The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC.
B)  Capital flight reduces investment opportunities and the need for saving in DVCs.
C)  There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving.
D)  The domestic output of DVCs is so low that the absolute volume of saving is small.E) B) and C)
F) A) and B)

Question 4

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

Question 5

The vicious circle of poverty is based on the connections between low income, low saving, low investment, and low productivity.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is typically not a problem for low-income DVCs?

Accepted Answer

A)  capital flight
B)  "brain drain"
C)  high saving rates that slow aggregate demand growth
D)  poor infrastructureE) B) and D)
F) None of the above

Question 7

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

Question 8

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) B) and D)
F) A) and B)

Question 9

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 10

Which of these sets of nations consists of high-income economies?

Accepted Answer

A)  Brazil, Thailand, and South Africa
B)  China, India, and Russia
C)  Canada, Switzerland, and France
D)  United States, South Korea, and MexicoE) C) and D)
F) B) and D)

Question 11

According to the United Nations, approximately what percentage of the world's income is received by the richest one-fifth of the world's population?

Accepted Answer

A)  24 percent
B)  38 percent
C)  60 percent
D)  75 percentE) None of the above
F) All of the above

Question 12

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

Question 13

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

Question 14

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 entrepreneurship.E) A) and B)
F) C) and D)

Question 15

Capital flight refers to

Accepted Answer

A)  the tendency of large corporations of IACs to build new plants in the DVCs because labor is cheaper.
B)  DVC citizens accumulating or investing their savings in the IACs.
C)  the high international mobility of speculative funds caused by variations in exchange rates.
D)  the tendency of DVCs to overinvest in commercial aircraft.E) B) and D)
F) None of the above

Question 16

Many of the major projects of the World Bank have been for

Accepted Answer

A)  making loans to private citizens.
B)  building infrastructure in a nation.
C)  supervising the banking system in DVCs.
D)  establishing new tax systems for governments in DVCs.E) C) and D)
F) A) and C)

Question 17

Which of the following countries had the best score in the Corruption Perception Index in 2015?

Accepted Answer

A)  Japan
B)  China
C)  United States
D)  CanadaE) All of the above
F) C) and D)

Question 18

Infrastructure is best illustrated by

Accepted Answer

A)  farm equipment.
B)  school buildings and highways.
C)  machinery and equipment for the production of consumer goods.
D)  government tax revenues.E) All of the above
F) A) and D)

Question 19

All of the following contribute to low investment spending in DVCs except

Accepted Answer

A)  low rates of saving.
B)  inadequacy of public capital goods (infrastructure) .
C)  political instability.
D)  expensive labor.E) None of the above
F) A) and C)

Question 20

Studies generally show that if there is more investment in capital goods in DVCs, there will be greater

Accepted Answer

A)  capital flight.
B)  economic growth.
C)  underemployment.
D)  unemployment.E) A) and C)
F) All of the above

Exam 22: The Economics of Developing Countries

Which of the following is typically not a problem for low-income DVCs?

Correct AnswerverifiedShow Answer

Investment in-kind refers to the possibility that

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Many of the major projects of the World Bank have been for

Correct AnswerverifiedShow Answer

Capital flight refers to

Correct AnswerverifiedShow Answer

Which of the following countries had the best score in the Corruption Perception Index in 2015?

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

Which of the given nations would be high-income countries (IACs) , according to the World Bank?

Correct AnswerverifiedShow Answer

Infrastructure is best illustrated by

Correct AnswerverifiedShow Answer

Capital flight is a problem facing DVCs that involves the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to the United Nations, approximately what percentage of the world's income is received by the richest one-fifth of the world's population?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

Rapid population growth can be an obstacle to economic development

Correct AnswerverifiedShow Answer

The vicious circle of poverty is based on the connections between low income, low saving, low investment, and low productivity.

Correct AnswerverifiedShow Answer

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

Correct AnswerverifiedShow Answer

Which of these sets of nations consists of high-income economies?

Correct AnswerverifiedShow Answer

Studies generally show that if there is more investment in capital goods in DVCs, there will be greater

Correct AnswerverifiedShow Answer

All of the following contribute to low investment spending in DVCs except

Correct AnswerverifiedShow Answer

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