Question 1

The government of a DVC may force the economy to save by deliberately causing inflation.This policy is undesirable because inflation may:

Accepted Answer

A)   distort investment away from productive facilities and toward luxury housing and precious metals.
B)   increase voluntary saving because the value of money is depreciating.
C)   contribute to a balance of trade surplus.
D)   entail all of these problems.E) C) and D)
F) A) and B)

Question 2

Economic growth may hinge on whether individuals and institutions within a nation want growth badly enough to change their traditional ways of doing things.This statement refers to:

Accepted Answer

A)   in-kind investment.
B)   the capricious universe view.
C)   human capital investment.
D)   the will to develop.E) B) and C)
F) A) and B)

Question 3

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 D)
F) C) and D)

Question 4

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

Question 5

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

Question 6

Which of the following is not a DVC policy likely to increase DVC economic growth?

Accepted Answer

A)   Encouraging direct foreign investment.
B)   Opening economics to world trade.
C)   Establishing independent central banks.
D)   Encouraging emigration of highly skilled workers.E) B) and C)
F) A) and D) D

Question 7

The idea that a person's productive efforts and his or her economic rewards are unrelated:

Accepted Answer

A)   is the neocolonialism view of economic development.
B)   describes the vicious circle of poverty.
C)   is the surplus labor theory of economic development.
D)   is the capricious universe view.E) None of the above
F) A) and B) D

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) B) and C)
F) None of the above D

Question 9

In many of the sub-Saharan African nations:

Accepted Answer

A)   population is growing more rapidly than food production.
B)   population growth is causing deforestation and diminished land quality.
C)   governments have favored investment in industry and military spending rather than investment for agriculture.
D)   all of these have been true.E) A) and C)
F) None of the above

Question 10

Small loans to entrepreneurs and small business owners in DVCs are referred to as:

Accepted Answer

A)   human capital development projects.
B)   microfinance.
C)   capital flight promotion systems.
D)   incubator lending.E) A) and D)
F) B) and D)

Question 11

In the DVCs,underemployment frequently takes the form of:

Accepted Answer

A)   factory workers who are working longer hours than they would prefer.
B)   workers who are employed inefficiently in small industry when they could be highly productive in agriculture.
C)   farmers whose productivity is very low.
D)   craft workers and artisans who are replaced by simple machinery and equipment.E) All of the above
F) B) 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 differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S.aid programs.

Accepted Answer

A) True 
 B)False

Question 14

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) None of the above

Question 15

Which of the following is generally not an effective strategy to promote DVC growth?

Accepted Answer

A)   Microlending.
B)   Human capital development.
C)   Fighting wars against neighbors to obtain resources and stimulate aggregate demand through arms spending.
D)   Controlling inflation.E) None of the above
F) A) and D)

Question 16

If the real GDP of a DVC increases from $600 billion to $630 billion and its population increases from 200 million to 216 million,its real per capita GDP will have:

Accepted Answer

A)   increased by about $83.
B)   decreased by about $83.
C)   remained unchanged.
D)   decreased by about $19.E) A) and D)
F) A) and B)

Question 17

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

Question 18

If two nations have different per capita income levels and their rates of economic growth are identical,then the absolute per capita income differential:

Accepted Answer

A)   will remain constant.
B)   may either widen or diminish.
C)   will diminish.
D)   will widen.E) C) and D)
F) B) and C)

Question 19

Development assistance as a percentage of GDP is greatest for which of the following industrialized nations (as of 2012) ?

Accepted Answer

A)   The United States.
B)   Norway.
C)   Sweden.
D)   Netherlands.E) C) and D)
F) B) and D)

Question 20

Over the next 15 years,___ out of every 10 people added to the world's population will be born in developing countries.

Accepted Answer

A)   6
B)   7
C)   8
D)   9E) B) and D)
F) B) and C)

Exam 41: The Economics of Developing Countries

The government of a DVC may force the economy to save by deliberately causing inflation.This policy is undesirable because inflation may:

Correct AnswerverifiedShow Answer

Economic growth may hinge on whether individuals and institutions within a nation want growth badly enough to change their traditional ways of doing things.This statement refers to:

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

Foreign aid to the DVCs has been criticized:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not a DVC policy likely to increase DVC economic growth?

Correct AnswerverifiedD

The idea that a person's productive efforts and his or her economic rewards are unrelated:

Correct AnswerverifiedD

Which of the following is a true statement?

Correct AnswerverifiedD

In many of the sub-Saharan African nations:

Correct AnswerverifiedShow Answer

Small loans to entrepreneurs and small business owners in DVCs are referred to as:

Correct AnswerverifiedShow Answer

In the DVCs,underemployment frequently takes the form of:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S.aid programs.

Correct AnswerverifiedShow Answer

Capital flight is a problem to DVCs because it:

Correct AnswerverifiedShow Answer

Which of the following is generally not an effective strategy to promote DVC growth?

Correct AnswerverifiedShow Answer

If the real GDP of a DVC increases from $600 billion to $630 billion and its population increases from 200 million to 216 million,its real per capita GDP will have:

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

If two nations have different per capita income levels and their rates of economic growth are identical,then the absolute per capita income differential:

Correct AnswerverifiedShow Answer

Development assistance as a percentage of GDP is greatest for which of the following industrialized nations (as of 2012) ?

Correct AnswerverifiedShow Answer

Over the next 15 years,___ out of every 10 people added to the world's population will be born in developing countries.

Correct AnswerverifiedShow Answer

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