Question 1

Capital flight is a problem to DVCs because it

Accepted Answer

A)  causes the value of a DVC's currency to appreciate.
B)  reduces the volume of DVC investment.
C)  reduces the flow of foreign aid from the IACs.
D)  causes inflation in the DVCs.E) A) and D)
F) B) and C)

Question 2

The basic role of the International Finance Corporation is to

Accepted Answer

A)  make loans to governments in developing nations.
B)  invest in private enterprises in developing nations.
C)  finance exports from the United States to developing nations.
D)  make loans to the World Bank, which in turn makes loans to governments in developing nations.E) A) and D)
F) B) and C)

Question 3

At the present time, the largest percentage of the national incomes of the low-income DVCs is used for

Accepted Answer

A)  imports of the finished products of foreign industries.
B)  food.
C)  infrastructure.
D)  industrial development.E) A) and B)
F) A) and C)

Question 4

A recommended policy for DVCs to implement that promotes economic growth is

Accepted Answer

A)  establishing realistic policies for exchange rates.
B)  obtaining more low-interest loans from the U.S.government.
C)  encouraging more tariffs and quotas to protect DVC businesses.
D)  discouraging direct foreign investment to make DVCs more self-sufficient.E) None of the above
F) A) and D)

Question 5

Underemployment occurs

Accepted Answer

A)  when workers do not have jobs.
B)  when farm workers become more productive.
C)  when workers are working fewer hours than they desire or when they are working less productively than they are capable of.
D)  in IACs but not in the DVCs.E) B) and C)
F) A) and D)

Question 6

Saving is low in many DVCs primarily because income is very equally distributed.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is correct?

Accepted Answer

A)  Saving is high in less-developed nations because the opportunities for consumption are limited.
B)  For developing nations, the annual rate of population increase is about 5 percent.
C)  Most of the labor forces of developing nations are engaged in light industrial production.
D)  Investment is low in developing nations, making it difficult to increase productivity and incomes.E) A) and C)
F) C) and D)

Question 8

In 2014, the GDP of the United States was approximately

Accepted Answer

A)  $8 trillion less than the GDP of the 135 DVCs in that year.
B)  $8 trillion more than the GDP of the 135 DVCs in that year.
C)  twice the GDP of the 135 DVCs in that year.
D)  the same as the GDP of 135 DVCs in that year.E) A) and D)
F) None of the above

Question 9

The "brain drain" problem in the DVCs refers to the fact the best-educated workers

Accepted Answer

A)  are reluctant to become entrepreneurs.
B)  are concentrated in rural areas where their skills are underutilized.
C)  often immigrate to industrialized countries.
D)  are reluctant to work in the public sector.E) All of the above
F) A) and C)

Question 10

The average per capita income in 2014 for low-income developing nations was about

Accepted Answer

A)  $630.
B)  $2,100.
C)  $1,240.
D)  $4,600.E) B) and C)
F) A) and B)

Question 11

Successful foreign aid programs

Accepted Answer

A)  enhance a DVC's resources and therefore shift its production possibilities curve to the left.
B)  enhance a DVC's resources and therefore shift its production possibilities curve to the right.
C)  move the DVC from a high-investment-low-consumption position to a low-investment-high-consumption position on its stable production possibilities curve.
D)  cause a DVC's exchange rate to depreciate.E) A) and B)
F) All of the above

Question 12

If a local leader in a developing nation claims that there is little or no correlation between a person's efforts and the economic rewards that are given to that person, this leader is most likely expressing a

Accepted Answer

A)  description of the vicious cycle of poverty.
B)  theory of exploitation and dependence.
C)  capricious view of the universe.
D)  rationale for neocolonialism.E) A) and B)
F) None of the above

Question 13

Which of the following IACs (industrially advanced countries)  was the leading provider of development assistance to DVCs (developing countries)  in 2015, in terms of absolute dollar amounts?

Accepted Answer

A)  United States
B)  Japan
C)  Canada
D)  GermanyE) All of the above
F) None of the above

Question 14

The vast majority of the labor forces of the low-income DVCs are engaged in agriculture.

Accepted Answer

A) True 
 B)False

Question 15

Industrially advanced countries can best help DVCs by

Accepted Answer

A)  directing requests from DVCs for aid to the World Bank.
B)  using the International Monetary Fund to determine exchange rates in DVCs.
C)  increasing management control over development projects.
D)  adopting policies that expand trade with DVCs.E) A) and B)
F) A) and D)

Question 16

One of the major objectives of the World Bank is to

Accepted Answer

A)  provide financial backing for the United Nations.
B)  maximize its profits for its worldwide shareholders.
C)  provide technical assistance to DVCs.
D)  maintain stable exchange rates in IACs and DVCs.E) B) and C)
F) A) and C)

Question 17

In 2014, the IACs (industrially advanced countries) had an average per capita income that was about 60 times as high as that of the low-income nations.

Accepted Answer

A) True 
 B)False

Question 18

Developing countries (DVCs)  can be subdivided into the following groups except

Accepted Answer

A)  low-income economies.
B)  high-income economies.
C)  lower-middle-income economies.
D)  upper-middle-income economies.E) B) and C)
F) C) and D)

Question 19

Which of the following is most characteristic of most developing nations?

Accepted Answer

A)  roughly equal distribution of income among the population
B)  high levels of labor productivity in agriculture
C)  low propensity to consume goods and services
D)  low levels of saving and investmentE) A) and B)
F) None of the above

Question 20

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

Exam 22: The Economics of Developing Countries

The "brain drain" problem in the DVCs refers to the fact the best-educated workers

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If a local leader in a developing nation claims that there is little or no correlation between a person's efforts and the economic rewards that are given to that person, this leader is most likely expressing a

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Successful foreign aid programs

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At the present time, the largest percentage of the national incomes of the low-income DVCs is used for

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The basic role of the International Finance Corporation is to

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The vast majority of the labor forces of the low-income DVCs are engaged in agriculture.

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In 2014, the GDP of the United States was approximately

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Developing countries (DVCs) can be subdivided into the following groups except

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The World Bank

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Underemployment occurs

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A recommended policy for DVCs to implement that promotes economic growth is

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Industrially advanced countries can best help DVCs by

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In 2014, the IACs (industrially advanced countries) had an average per capita income that was about 60 times as high as that of the low-income nations.

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Which of the following IACs (industrially advanced countries) was the leading provider of development assistance to DVCs (developing countries) in 2015, in terms of absolute dollar amounts?

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The average per capita income in 2014 for low-income developing nations was about

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Which of the following statements is correct?

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Saving is low in many DVCs primarily because income is very equally distributed.

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Which of the following is most characteristic of most developing nations?

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One of the major objectives of the World Bank is to

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Capital flight is a problem to DVCs because it

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