Question 1

All of the following contributes to economic development except

Accepted Answer

A)  high saving and investment rates. 
B)  low population growth rate. 
C)  the existence of a socialist economic system to ensure that a country's output is fairly distributed. 
D)  investment in infrastructure. 
A)  high saving and investment rates. 
B)  low population growth rate. 
C)  the existence of a socialist economic system to ensure that a country's output is fairly distributed. 
D)  investment in infrastructure.

Question 2

To facilitate an international comparison of standards of living, the World Bank

Accepted Answer

A)  uses a weighted index of exchange rates to convert local currency. 
B)  converts currencies to dollars on the basis of purchasing power. 
C)  assigns more weight to agricultural production than to manufacturing since most low-income countries tend to be agrarian economies. 
D)  converts currencies to U.S. dollars using an exchange rate, averaged over a three-year period in order to smooth out the effects of currency fluctuations, 
A)  uses a weighted index of exchange rates to convert local currency. 
B)  converts currencies to dollars on the basis of purchasing power. 
C)  assigns more weight to agricultural production than to manufacturing since most low-income countries tend to be agrarian economies. 
D)  converts currencies to U.S. dollars using an exchange rate, averaged over a three-year period in order to smooth out the effects of currency fluctuations,

Question 3

One way by which the World Bank converts gross national income (GNI) figures to dollars is to take the GNI in a local currency and convert using the exchange rate, averaged over a three-year period in order to smooth out the effects of currency fluctuations. Which of the following is a shortcoming of this method for international comparisons of standards of living?

Accepted Answer

A)  Currency exchange rates may fluctuate drastically from year-to-year. 
B)  A country could have a relatively high standard of living but, for a variety of reasons, a low exchange rate. 
C)  This method cannot be applied to countries that have fixed exchange rates. 
D)  The method does not take into account trade conducted on the basis of barter. 
A)  Currency exchange rates may fluctuate drastically from year-to-year. 
B)  A country could have a relatively high standard of living but, for a variety of reasons, a low exchange rate. 
C)  This method cannot be applied to countries that have fixed exchange rates. 
D)  The method does not take into account trade conducted on the basis of barter.

Question 4

Which of the following is required for a country to successfully pursue an import-substitution strategy?

Accepted Answer

A)  Imposition of protective tariffs 
B)  Policies to encourage foreign investment in order to facilitate rapid technology transfer 
C)  A flexible exchange rate system 
D)  A liberal immigration policy to increase the size of the labor force 
A)  Imposition of protective tariffs 
B)  Policies to encourage foreign investment in order to facilitate rapid technology transfer 
C)  A flexible exchange rate system 
D)  A liberal immigration policy to increase the size of the labor force

Question 5

Which of the following statements is true about the agricultural sector in low-income nations?

Accepted Answer

A)  The agricultural sector has been decreasing in size because its productive workers prefer to migrate to urban areas. 
B)  The agricultural sector is by far the largest producer and the most productive sector in low-income countries. 
C)  Although the agricultural sector is the largest employer, labor's productivity in this sector is very low. 
D)  The agricultural sector has been increasing in size and in terms of labor productivity as rural farmers increasingly start to mechanize. 
A)  The agricultural sector has been decreasing in size because its productive workers prefer to migrate to urban areas. 
B)  The agricultural sector is by far the largest producer and the most productive sector in low-income countries. 
C)  Although the agricultural sector is the largest employer, labor's productivity in this sector is very low. 
D)  The agricultural sector has been increasing in size and in terms of labor productivity as rural farmers increasingly start to mechanize.

Question 6

The world's low-income countries have completed the process of demographic transition.

Accepted Answer

A) True 
 B)False

Question 7

In general, economists believe that

Accepted Answer

A)  economic growth has a greater impact on people's welfare in high-income countries than in low-income countries. 
B)  in low-income countries, economic growth makes rich people richer and poor people poorer. 
C)  economic growth makes most people, including most poor people, better off. 
D)  economic growth worsens income inequality in the short-run but is successful at redistribution in the long run. 
A)  economic growth has a greater impact on people's welfare in high-income countries than in low-income countries. 
B)  in low-income countries, economic growth makes rich people richer and poor people poorer. 
C)  economic growth makes most people, including most poor people, better off. 
D)  economic growth worsens income inequality in the short-run but is successful at redistribution in the long run.

Question 8

A strategy of restricting imports and substituting domestic production of those goods is called

Accepted Answer

A)  trade restraint strategy. 
B)  import substitution strategy. 
C)  trade blockage strategy. 
D)  export substitution strategy. 
A)  trade restraint strategy. 
B)  import substitution strategy. 
C)  trade blockage strategy. 
D)  export substitution strategy.

Question 9

All of the following contributes to economic development except

Accepted Answer

A)  high saving and investment rates. 
B)  low population growth rate. 
C)  the existence of a market economy. 
D)  abundant exportable natural resources. 
A)  high saving and investment rates. 
B)  low population growth rate. 
C)  the existence of a market economy. 
D)  abundant exportable natural resources.

Question 10

In recent years, the United Nations has constructed measures incorporating dimensions of economic development that go beyond the level of per capita GDP. These measures include 
I. Gender Development Index.
II. International Standard of Living Index.
III. Human Development Index.
IV. Human Poverty Index.

Accepted Answer

A)  all of the above 
B)  I, II, and IV only 
C)  I, III, and IV only 
D)  II, III, and IV only 
A)  all of the above 
B)  I, II, and IV only 
C)  I, III, and IV only 
D)  II, III, and IV only

Question 11

Figure 19-1  
-Refer to Figure 19-1. The 20% of households with the lowest incomes in Cote d'Ivoire have

Accepted Answer

A)  the same share of their country's total income as the poorest 20% of households in Guinea have. 
B)  a larger share of their country's total income than the poorest 20% of households in Guinea have. 
C)  a smaller share of their country's total income than the poorest 20% of households in Guinea have. 
D)  a larger share of their country's total income than the richest 20% of households in Guinea have. 
A)  the same share of their country's total income as the poorest 20% of households in Guinea have. 
B)  a larger share of their country's total income than the poorest 20% of households in Guinea have. 
C)  a smaller share of their country's total income than the poorest 20% of households in Guinea have. 
D)  a larger share of their country's total income than the richest 20% of households in Guinea have.

Question 12

The Malthusian population theory states that population growth directly causes poverty and underdevelopment because it impacts the environment in negative ways.

Accepted Answer

A) True 
 B)False

Question 13

Economic development is more concerned with widely shared long-run increases in per capita real output than short-run changes in per capita real output.

Accepted Answer

A) True 
 B)False

Question 14

In recent years, the United Nations has constructed measures incorporating dimensions of economic development that go beyond the level of per capita GDP. These measures include 
I. United Nations Standard of Living Index.
II. Human and Real Growth Index.
III. Human Development Index.
IV. Human Poverty Index.

Accepted Answer

A)  all of the above 
B)  II, III, and IV only 
C)  II and III only 
D)  III and IV only 
A)  all of the above 
B)  II, III, and IV only 
C)  II and III only 
D)  III and IV only

Question 15

Evidence shows that countries that have endorsed a policy of import substitution have been successful in its development efforts.

Accepted Answer

A) True 
 B)False

Question 16

The Malthusian population theory

Accepted Answer

A)  was eventually dismissed for its pessimism and failure to take into account technological advances in agriculture and food production. 
B)  failed because contrary to Malthus' argument, agricultural production is not subject to diminishing returns. 
C)  was not borne out in low-income countries because "population checks" (war, famine, etc.) kept population growth down while real GDP growth increased. 
D)  states that the root cause of underdevelopment is unchecked population growth. 
A)  was eventually dismissed for its pessimism and failure to take into account technological advances in agriculture and food production. 
B)  failed because contrary to Malthus' argument, agricultural production is not subject to diminishing returns. 
C)  was not borne out in low-income countries because "population checks" (war, famine, etc.) kept population growth down while real GDP growth increased. 
D)  states that the root cause of underdevelopment is unchecked population growth.

Question 17

The newly industrializing economies of the Pacific Rim that have experienced rapid economic growth include

Accepted Answer

A)  North Korea, Burma, Vietnam, and Cambodia. 
B)  Japan, Thailand, Laos, and New Zealand. 
C)  Malaysia, Philippines, Indonesia, and China. 
D)  South Korea, Taiwan, Singapore, and Hong Kong. 
A)  North Korea, Burma, Vietnam, and Cambodia. 
B)  Japan, Thailand, Laos, and New Zealand. 
C)  Malaysia, Philippines, Indonesia, and China. 
D)  South Korea, Taiwan, Singapore, and Hong Kong.

Question 18

According to most economists,

Accepted Answer

A)  the demand for political freedom increases as incomes rise, making the creation of democratic institutions a product of economic growth, not a cause of it. 
B)  the lack of political freedom hinders economic growth in poor countries because it gives rise to bureaucratic corruption. 
C)  economic development is impossible without democracy. 
D)  democracy and economic development are incompatible at least in the initial stages of development; evidence shows that authoritarian regimes are better able to reap the benefits of economic development than democratic regimes. 
A)  the demand for political freedom increases as incomes rise, making the creation of democratic institutions a product of economic growth, not a cause of it. 
B)  the lack of political freedom hinders economic growth in poor countries because it gives rise to bureaucratic corruption. 
C)  economic development is impossible without democracy. 
D)  democracy and economic development are incompatible at least in the initial stages of development; evidence shows that authoritarian regimes are better able to reap the benefits of economic development than democratic regimes.

Question 19

Dependency theory posits that

Accepted Answer

A)  the lack of free trade between developed countries and poor countries has hurt the poor countries. 
B)  the cause of the low levels of development in poor countries is caused by their reliance and dependence on developed countries. 
C)  all countries follow the same predetermined paths to development, starting from import substitution strategy to export-led growth. 
D)  rich nations that are not endowed with natural resources are dependent on poor resource-rich countries for the former's consumption goods. 
A)  the lack of free trade between developed countries and poor countries has hurt the poor countries. 
B)  the cause of the low levels of development in poor countries is caused by their reliance and dependence on developed countries. 
C)  all countries follow the same predetermined paths to development, starting from import substitution strategy to export-led growth. 
D)  rich nations that are not endowed with natural resources are dependent on poor resource-rich countries for the former's consumption goods.

Question 20

Simon Kuznets hypothesized that at low levels of per capita income, increases in income would lead to increases in income inequality because

Accepted Answer

A)  in less developed countries, the rich are able to save and invest and therefore enrich themselves, while the poor remain at essentially the same economic level. 
B)  structural changes that often accompany early growth, such as rural-urban migration, occupational changes, and environmental degradation, disproportionately hurt poorer people. 
C)  growth enhancing policies tend to favor middle-income and high-income households rather than poor households. 
D)  development processes tend to be concentrated in the manufacturing sector and not in work in the agricultural sector which employs mostly low-income people. 
A)  in less developed countries, the rich are able to save and invest and therefore enrich themselves, while the poor remain at essentially the same economic level. 
B)  structural changes that often accompany early growth, such as rural-urban migration, occupational changes, and environmental degradation, disproportionately hurt poorer people. 
C)  growth enhancing policies tend to favor middle-income and high-income households rather than poor households. 
D)  development processes tend to be concentrated in the manufacturing sector and not in work in the agricultural sector which employs mostly low-income people.

All of the following contributes to economic development except

To facilitate an international comparison of standards of living, the World Bank

Which of the following is required for a country to successfully pursue an import-substitution strategy?

Which of the following statements is true about the agricultural sector in low-income nations?

The world's low-income countries have completed the process of demographic transition.

In general, economists believe that

A strategy of restricting imports and substituting domestic production of those goods is called

All of the following contributes to economic development except

Figure 19-1 -Refer to Figure 19-1. The 20% of households with the lowest incomes in Cote d'Ivoire have

The Malthusian population theory states that population growth directly causes poverty and underdevelopment because it impacts the environment in negative ways.

Economic development is more concerned with widely shared long-run increases in per capita real output than short-run changes in per capita real output.

Evidence shows that countries that have endorsed a policy of import substitution have been successful in its development efforts.

The Malthusian population theory

The newly industrializing economies of the Pacific Rim that have experienced rapid economic growth include

According to most economists,

Dependency theory posits that

Simon Kuznets hypothesized that at low levels of per capita income, increases in income would lead to increases in income inequality because

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Socialist Economies in Transition

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Exam 19: Economic Development

All of the following contributes to economic development except

To facilitate an international comparison of standards of living, the World Bank

Which of the following is required for a country to successfully pursue an import-substitution strategy?

Which of the following statements is true about the agricultural sector in low-income nations?

The world's low-income countries have completed the process of demographic transition.

In general, economists believe that

A strategy of restricting imports and substituting domestic production of those goods is called

All of the following contributes to economic development except

Figure 19-1 -Refer to Figure 19-1. The 20% of households with the lowest incomes in Cote d'Ivoire have

The Malthusian population theory states that population growth directly causes poverty and underdevelopment because it impacts the environment in negative ways.

Economic development is more concerned with widely shared long-run increases in per capita real output than short-run changes in per capita real output.

Evidence shows that countries that have endorsed a policy of import substitution have been successful in its development efforts.

The Malthusian population theory

The newly industrializing economies of the Pacific Rim that have experienced rapid economic growth include

According to most economists,

Dependency theory posits that

Simon Kuznets hypothesized that at low levels of per capita income, increases in income would lead to increases in income inequality because

Economics: the Study of Choice

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Measuring Total Output and Income

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Inflation and Unemployment

A Brief History of Macroeconomic Thought and Policy

Inequality, Poverty, and Discrimination

Socialist Economies in Transition

Filters