Question 1

In recent years, a greater proportion of private capital flows to DVCs has been direct foreign investment rather than loans to DVC governments.

Accepted Answer

A) True 
 B)False

Question 2

When economists refer to capital flight, they are speaking of an

Accepted Answer

A)   outflow of financial capital from a certain country.
B)   outflow of real capital from a certain country.
C)   outflow of financial and real capital from a certain country.
D)   outflow of human capital from a certain country.E) B) and C)
F) None of the above

Question 3

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

Question 4

Japan is a nation that achieved a high standard of living despite having a very limited supply of natural resources.

Accepted Answer

A) True 
 B)False

Question 5

When technological advances are of the capital-using kind, it is possible for an economy to increase its productivity without any net investment in capital goods.

Accepted Answer

A) True 
 B)False

Question 6

In recent years, many DVCs have come to realize that

Accepted Answer

A)   expanded international trade is harmful to DVCs.
B)   private capital investment is essential for economic growth in DVCs.
C)   the International Monetary Fund is the major institutional barrier to economic growth.
D)   government involvement in economic development is the only avenue for economic growth.E) A) and B)
F) None of the above

Question 7

A large portion of foreign aid from IACs to DVCs is provided on the basis of

Accepted Answer

A)   economic considerations.
B)   geographical considerations.
C)   humanitarian considerations.
D)   politico-military considerations.E) A) and B)
F) A) and C)

Question 8

If the real output of a DVC increases from $200 billion to $260 billion and its population increases from 100 to 120 million, its real per capita output will have

Accepted Answer

A)   remained unchanged.
B)   increased by about $167.
C)   increased by about $55.
D)   decreased by about $20.E) B) and C)
F) B) and D)

Question 9

Land reform (or the reform of land ownership) is a relatively minor institutional obstacle to economic growth in many developing countries.

Accepted Answer

A) True 
 B)False

Question 10

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 shareholders.E) A) and B)
F) A) and C)

Question 11

The primary function of the International Finance Corporation (IFC)  is to

Accepted Answer

A)   provide U.S. surplus food to low-income countries.
B)   provide short-term loans to poor countries to finance international trade deficits.
C)   make infrastructure loans, that is, loans for highways, schools, communication facilities, and so forth.
D)   make loans to private enterprises in the DVCs.E) None of the above
F) C) and D)

Question 12

The government of a DVC may purposely cause inflation because

Accepted Answer

A)   a rapid rate of inflation attracts private foreign capital into a DVC.
B)   there is conclusive evidence that inflation discourages people from having large families.
C)   this will strengthen the nation's position in international markets.
D)   inflation works like taxation in that it may release resources from consumption so that they can be invested.E) A) and D)
F) All of the above

Question 13

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 C)
F) A) and B)

Question 14

The low per capita outputs of the DVCs are explained by

Accepted Answer

A)   insufficient saving and investment.
B)   overinvestment in human capital.
C)   slow population growth.
D)   excessively rapid technological advance.E) B) and C)
F) A) and D)

Question 15

Foreign aid to the DVCs has been criticized

Accepted Answer

A)   because it may generate economic dependence on the IACs.
B)   because it encourages the centralization of government power over the economy.
C)   because government corruption in the DVCs causes aid to be misused.
D)   for all of these reasons.E) None of the above
F) B) and C)

Question 16

The international agency that lends money to DVCs for economic development projects is the

Accepted Answer

A)   World Bank.
B)   International Monetary Fund (IMF) .
C)   World Trade Organization (WTO) .
D)   World Credit Union.E) All of the above
F) None of the above

Question 17

Which of the following describes the vicious circle of poverty?

Accepted Answer

A)   Government spending for public goods is inflationary, and this undermines incentives to save and invest.
B)   Higher incomes increase consumption at the expense of capital accumulation, which causes income to fall.
C)   Low per capita incomes cause low levels of saving and investment, which mean low productivity and therefore low incomes.
D)   A growing national income increases the demand for money, which increases the interest rate and reduces investment.E) None of the above
F) A) and B)

Question 18

DVCs tend to have permanent shortages of farm labor.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

What is needed to aid capital formation in developing countries?

Accepted Answer

A)   more capital flight
B)   more oil resources
C)   more entrepreneurship
D)   higher price supports for productsE) A) and B)
F) A) and C)

Exam 28: The Economics of Developing Countries

An institutional change that is needed in most developing nations is

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

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The international agency that lends money to DVCs for economic development projects is the

Correct AnswerverifiedShow Answer

In recent years, many DVCs have come to realize that

Correct AnswerverifiedShow Answer

DVCs tend to have permanent shortages of farm labor.

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The primary function of the International Finance Corporation (IFC) is to

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When economists refer to capital flight, they are speaking of an

Correct AnswerverifiedShow Answer

The low per capita outputs of the DVCs are explained by

Correct AnswerverifiedShow Answer

Land reform (or the reform of land ownership) is a relatively minor institutional obstacle to economic growth in many developing countries.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the real output of a DVC increases from $200 billion to $260 billion and its population increases from 100 to 120 million, its real per capita output will have

Correct AnswerverifiedShow Answer

Which of the following describes the vicious circle of poverty?

Correct AnswerverifiedShow Answer

Foreign aid to the DVCs has been criticized

Correct AnswerverifiedShow Answer

Japan is a nation that achieved a high standard of living despite having a very limited supply of natural resources.

Correct AnswerverifiedShow Answer

When technological advances are of the capital-using kind, it is possible for an economy to increase its productivity without any net investment in capital goods.

Correct AnswerverifiedShow Answer

What is needed to aid capital formation in developing countries?

Correct AnswerverifiedShow Answer

In recent years, a greater proportion of private capital flows to DVCs has been direct foreign investment rather than loans to DVC governments.

Correct AnswerverifiedShow Answer

The government of a DVC may purposely cause inflation because

Correct AnswerverifiedShow Answer

A large portion of foreign aid from IACs to DVCs is provided on the basis of

Correct AnswerverifiedShow Answer

The World Bank seeks to

Correct AnswerverifiedShow Answer

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