Question 1

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

Question 2

An institutional change that is needed in most developing nations is

Accepted Answer

A)  the will to develop.
B)  reduced foreign aid.
C)  birth control.
D)  land reform.E) C) and D)
F) B) and D)

Question 3

Many economists believe that the key to breaking the vicious circle of poverty is to

Accepted Answer

A)  cut down the mortality rates in poor nations.
B)  reduce the birth rates in poor nations.
C)  increase the mobility of labor and migration.
D)  increase the rate of capital accumulation in poor nations.E) None of the above
F) A) and B)

Question 4

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

Question 5

If a technological advance expands output and requires a smaller investment in capital goods, this technological advance

Accepted Answer

A)  is capital-using.
B)  must involve nonfinancial investment.
C)  is capital-saving.
D)  must pertain to the infrastructure.E) A) and C)
F) A) and B)

Question 6

The poorest 20 percent of the world's population receive what percentage of world income?

Accepted Answer

A)  less than 2 percent
B)  about 4 percent
C)  around 8 percent
D)  close to 10 percentE) B) and C)
F) None of the above

Question 7

Expanding the supplies of raw materials, capital equipment, effective labor, and technological knowledge will

Accepted Answer

A)  shift outward the production possibilities curve for a nation.
B)  increase the demand for and decrease the supply of productive resources.
C)  make a nation less productive because of the need to coordinate the increased quantity of resources.
D)  lead to increased population growth that will decrease the per capita growth in a nation.E) A) and D)
F) None of the above

Question 8

Which of the following is a true statement?

Accepted Answer

A)  Direct foreign investment to DVCs is increasingly provided by commercial banks.
B)  Direct foreign investment to DVCs has dwindled to near zero in recent years.
C)  Approximately 5 percent of the GDP of IACs goes to foreign aid.
D)  Foreign aid from the IACs to the DVCs has greatly expanded in the past several years.E) A) and D)
F) A) and B)

Question 9

One common measure of the "standard of living" in a nation is

Accepted Answer

A)  per capita real income.
B)  unemployment rate.
C)  real GDP.
D)  population size.E) A) and B)
F) None of the above

Question 10

The demographic transition view of population growth argues that, on average (and as perceived by parents) , the marginal

Accepted Answer

A)  benefits of extra children are larger in IACs than in DVCs.
B)  costs of extra children are lower in IACs than in DVCs.
C)  costs of extra children are larger in IACs than in DVCs.
D)  benefits of extra children are the same in DVCs and IACs.E) A) and D)
F) B) and C)

Question 11

The capricious universe view indicates that

Accepted Answer

A)  in the long run, "acts of God" have contained population growth and thus contributed to economic development.
B)  DVCs will obtain biological and chemical weapons and force the redistribution of world wealth.
C)  there is little or no correlation between one's efforts and the rewards he or she receives.
D)  international and civil wars have been the primary impediment to growth.E) A) and B)
F) C) and D)

Question 12

Most nations of the world are now IACs, not middle- and low-income DVCs.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

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 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

Examples of low-income developing countries are

Accepted Answer

A)  Switzerland, New Zealand, and Australia.
B)  Germany, Austria, and Italy.
C)  Chad, Bangladesh, and Ethiopia.
D)  Mexico, South Korea, and Brazil.E) A) and C)
F) C) and D)

Question 17

Capital flight from the DVCs may be caused by

Accepted Answer

A)  a fear of government privatization efforts.
B)  slow domestic inflation.
C)  low rates of domestic taxation.
D)  risks of severe fluctuations in exchange rates.E) B) and C)
F) C) and D)

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

Increases in the total real output of many DVCs do not increase the nation's standard of living because

Accepted Answer

A)  diminishing returns may be encountered in increasing total output.
B)  population increases may dissipate the increase in real output.
C)  disguised unemployment in agriculture will persist.
D)  surplus farm labor may move from rural areas to industrial areas, causing unemployment.E) A) and B)
F) A) and C)

Question 20

In contrast to international development efforts in most of the 20th century, more recent projects like microfinance, microcredit, and cash transfers in the last few decades represent a major shift.That is because these recent projects are

Accepted Answer

A)  all sponsored by local governments.
B)  done through the United Nations.
C)  launched by universities and colleges.
D)  focused on giving direct aid to poor individuals.E) C) and D)
F) None of the above

Exam 42: The Economics of Developing Countries

Many economists believe that the key to breaking the vicious circle of poverty is to

Correct AnswerverifiedShow Answer

An institutional change that is needed in most developing nations is

Correct AnswerverifiedShow Answer

The capricious universe view indicates that

Correct AnswerverifiedShow Answer

In contrast to international development efforts in most of the 20th century, more recent projects like microfinance, microcredit, and cash transfers in the last few decades represent a major shift.That is because these recent projects are

Correct AnswerverifiedShow Answer

Increases in the total real output of many DVCs do not increase the nation's standard of living because

Correct AnswerverifiedShow Answer

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

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The poorest 20 percent of the world's population receive what percentage of world income?

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The demographic transition view of population growth argues that, on average (and as perceived by parents) , the marginal

Correct AnswerverifiedShow Answer

One common measure of the "standard of living" in a nation is

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

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

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Examples of low-income developing countries are

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

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Capital flight from the DVCs may be caused by

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

Expanding the supplies of raw materials, capital equipment, effective labor, and technological knowledge will

Correct AnswerverifiedShow Answer

If a technological advance expands output and requires a smaller investment in capital goods, this technological advance

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

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The World Bank

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Most nations of the world are now IACs, not middle- and low-income DVCs.

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