Question 1

Grants in the form of foreign aid from the developed nations constitute the largest portion of funding for infrastructure development in poor countries.

Accepted Answer

A) True 
 B)False

Question 2

Between 1965 and 1980, the world population grew at an annual rate of 2%. Using the rule of 72, population is expected to double in

Accepted Answer

A)  144 years. 
B)  36 years. 
C)  24 years. 
D)  18 years. 
A)  144 years. 
B)  36 years. 
C)  24 years. 
D)  18 years.

Question 3

Figure 19-1  
-Refer to Figure 19-1. Based on the Lorenz curves, which of the two countries do you believe fits better the definition of development?

Accepted Answer

A)  Cote d'Ivoire, because its low income households have a higher per capita real GDP than low income households in Guinea. 
B)  Guinea, because there are more high-income households in Guinea than in Cote d'Ivoire. 
C)  Cote d'Ivoire, because its income distribution is comparatively more equal than Guinea's which suggests that Cote d'Ivoire is coming closer to generating widely shared gains in per capita real GDP. 
D)  Guinea, because its income distribution is comparatively more equal than Cote d'Ivoire's which suggests that Guinea is coming closer to generating widely shared gains in per capita real GDP. 
A)  Cote d'Ivoire, because its low income households have a higher per capita real GDP than low income households in Guinea. 
B)  Guinea, because there are more high-income households in Guinea than in Cote d'Ivoire. 
C)  Cote d'Ivoire, because its income distribution is comparatively more equal than Guinea's which suggests that Cote d'Ivoire is coming closer to generating widely shared gains in per capita real GDP. 
D)  Guinea, because its income distribution is comparatively more equal than Cote d'Ivoire's which suggests that Guinea is coming closer to generating widely shared gains in per capita real GDP.

Question 4

Which of the following is a flaw in Malthus' population theory?

Accepted Answer

A)  His belief that growth in real GDP cannot exceed population growth real GDP despite technological advancements. 
B)  His belief that any increase in income would boost population growth failed to take into account the fact that higher incomes increase this opportunity cost and therefore reduces the number of children people want. 
C)  Rising incomes makes it more affordable for families to have more children and to educate their children so that they become productive members of society. 
D)  He failed to take into account that over time, as countries develop, the agricultural industry shrinks, reducing the need for people to have large families to help out in the family farm. 
A)  His belief that growth in real GDP cannot exceed population growth real GDP despite technological advancements. 
B)  His belief that any increase in income would boost population growth failed to take into account the fact that higher incomes increase this opportunity cost and therefore reduces the number of children people want. 
C)  Rising incomes makes it more affordable for families to have more children and to educate their children so that they become productive members of society. 
D)  He failed to take into account that over time, as countries develop, the agricultural industry shrinks, reducing the need for people to have large families to help out in the family farm.

Question 5

Economic growth implies

Accepted Answer

A)  qualitative changes in productive processes, whereas economic development requires quantitative changes in productive processes. 
B)  outward shifts of the production possibilities curve over time, whereas economic development requires movement from a point inside a curve to a point on the production possibilities curve. 
C)  widespread structural changes in the way people live, whereas economic development requires quantitative changes in productive processes. 
D)  quantitative changes in productive processes, whereas economic development requires qualitative change in virtually every aspect. of life 
A)  qualitative changes in productive processes, whereas economic development requires quantitative changes in productive processes. 
B)  outward shifts of the production possibilities curve over time, whereas economic development requires movement from a point inside a curve to a point on the production possibilities curve. 
C)  widespread structural changes in the way people live, whereas economic development requires quantitative changes in productive processes. 
D)  quantitative changes in productive processes, whereas economic development requires qualitative change in virtually every aspect. of life

Question 6

One reason why low-income countries lack physical capital is that poor countries have a hard time generating much domestic savings, since living standards are so low.

Accepted Answer

A) True 
 B)False

Question 7

The Kuznets hypothesis, discussed in the Case in Point titled "(Growth and Development) or (Growth or Development)," argued that at low levels of per capita income, increases in income would likely

Accepted Answer

A)  increase income inequality in developing countries. 
B)  reduce income inequality in developing countries. 
C)  increase the rate of structural change in developing countries. 
D)  reduce the rate of structural change in developing countries. 
A)  increase income inequality in developing countries. 
B)  reduce income inequality in developing countries. 
C)  increase the rate of structural change in developing countries. 
D)  reduce the rate of structural change in developing countries.

Question 8

Empirical data on population growth and growth in real per capita GDP for more than 100 developing countries show that 
I. in most countries, agricultural production declined while population growth increased, leading to starvation and malnutrition.
II. some countries had relatively rapid population growth, and had a rapid increase in per capita real GDP.
III. many countries experienced both rapid population growth and negative changes in per capita real GDP.

Accepted Answer

A)  I only 
B)  III only 
C)  I and III only 
D)  II and III only 
A)  I only 
B)  III only 
C)  I and III only 
D)  II and III only

Question 9

The World Bank, an international organization designed to support economic development, classifies countries according to their levels of per capita gross national income. Countries with per capita incomes of $935 or less in 2007 were classified as

Accepted Answer

A)  under-developed countries. 
B)  low-income countries. 
C)  impoverished countries. 
D)  middle-income countries. 
A)  under-developed countries. 
B)  low-income countries. 
C)  impoverished countries. 
D)  middle-income countries.

Question 10

What is economic development and how is it different from economic growth? Is it possible to have economic development without economic growth? Explain.

Accepted Answer

Economic development refers to the susta

Question 11

Which of the following is an obstacle poor countries face in seeking development finance funds from foreign savers?

Accepted Answer

A)  Governments of many rich countries impose restrictions on capital flows to poor countries. 
B)  Many poor countries impose restrictions on the inflow of foreign funds. 
C)  The difficulty of repaying loans denominated in foreign currency. 
D)  The difficulty of taxing the interest income earned by foreigners on loans to poor countries. 
A)  Governments of many rich countries impose restrictions on capital flows to poor countries. 
B)  Many poor countries impose restrictions on the inflow of foreign funds. 
C)  The difficulty of repaying loans denominated in foreign currency. 
D)  The difficulty of taxing the interest income earned by foreigners on loans to poor countries.

Question 12

The World Bank predicts that world population growth during the 2005 to 2015 period will be

Accepted Answer

A)  slower than growth during the 1965 to 1980 period, leading to a longer doubling time. 
B)  slower than growth during the 1965 to 1980 period, leading to a slower doubling time. 
C)  faster than growth during the 1965 to 1980 period, leading to a longer doubling time 
D)  faster than growth during the 1965 to 1980 period, leading to a shorter doubling time 
A)  slower than growth during the 1965 to 1980 period, leading to a longer doubling time. 
B)  slower than growth during the 1965 to 1980 period, leading to a slower doubling time. 
C)  faster than growth during the 1965 to 1980 period, leading to a longer doubling time 
D)  faster than growth during the 1965 to 1980 period, leading to a shorter doubling time

Question 13

The Gender Development Index (GDI)

Accepted Answer

A)  measures the percentage of women who are illiterate and living in poverty. 
B)  uses the same variables as the Human Development Index but adjusts them downward to take into account the extent of gender inequality. 
C)  measures the extent of income inequality between households headed by males and households headed by females. 
D)  measures the difference in educational attainment between males and females. 
A)  measures the percentage of women who are illiterate and living in poverty. 
B)  uses the same variables as the Human Development Index but adjusts them downward to take into account the extent of gender inequality. 
C)  measures the extent of income inequality between households headed by males and households headed by females. 
D)  measures the difference in educational attainment between males and females.

Question 14

The World Bank, an international organization designed to support economic development, classifies countries according to their levels of per capita gross national income. Countries with per capita incomes of $11,456 or more in 2007 were classified as

Accepted Answer

A)  industrialized countries. 
B)  advanced developed countries. 
C)  high-income countries. 
D)  western industrialized countries. 
A)  industrialized countries. 
B)  advanced developed countries. 
C)  high-income countries. 
D)  western industrialized countries.

Question 15

Compared to middle- and high-income countries, low-income countries are often characterized by

Accepted Answer

A)  higher rates of poverty. 
B)  less income inequality. 
C)  a smaller share of income used for consumption. 
D)  a smaller proportion of the labor force in agriculture. 
A)  higher rates of poverty. 
B)  less income inequality. 
C)  a smaller share of income used for consumption. 
D)  a smaller proportion of the labor force in agriculture.

Question 16

Economic growth alone is an adequate yardstick for a country's level of development.

Accepted Answer

A) True 
 B)False

Question 17

To facilitate an international comparison of standards of living, the World Bank compares incomes and converts currencies to dollars on the basis of purchasing power. This measure is reported in

Accepted Answer

A)  U.S. dollars. 
B)  a trade-weighted dollar. 
C)  international dollars. 
D)  real U.S. dollars, that is, adjusted for inflation. 
A)  U.S. dollars. 
B)  a trade-weighted dollar. 
C)  international dollars. 
D)  real U.S. dollars, that is, adjusted for inflation.

Question 18

The common traits shared by the newly industrializing economies of the Pacific Rim that have experienced rapid economic growth include

Accepted Answer

A)  export-oriented strategies and subsidized private production of most goods and services. 
B)  agriculture-oriented growth strategies and government production of most goods and services. 
C)  export-oriented growth strategies and limited the role of governments mainly to infrastructure and institutional development and enforcement of laws. 
D)  emphasis on the quantity of output rather than the quality and a large public sector. 
A)  export-oriented strategies and subsidized private production of most goods and services. 
B)  agriculture-oriented growth strategies and government production of most goods and services. 
C)  export-oriented growth strategies and limited the role of governments mainly to infrastructure and institutional development and enforcement of laws. 
D)  emphasis on the quantity of output rather than the quality and a large public sector.

Question 19

One reason why low-income countries lack physical capital is

Accepted Answer

A)  due to the lack of financial institutions where savers can deposit funds and earn interest on their funds. 
B)  that poor countries have a hard time generating much domestic savings, since living standards are so low. 
C)  because the bulk of savings is invested in military equipment to fight political unrest. 
D)  because of the high rate of corruption in government. 
A)  due to the lack of financial institutions where savers can deposit funds and earn interest on their funds. 
B)  that poor countries have a hard time generating much domestic savings, since living standards are so low. 
C)  because the bulk of savings is invested in military equipment to fight political unrest. 
D)  because of the high rate of corruption in government.

Question 20

Dependency theory holds that the industrialized nations control the destiny of the
Jdeveloping nations. Explain the rationale for this argument.

Accepted Answer

Dependency theory argues that the indust

Grants in the form of foreign aid from the developed nations constitute the largest portion of funding for infrastructure development in poor countries.

Between 1965 and 1980, the world population grew at an annual rate of 2%. Using the rule of 72, population is expected to double in

Figure 19-1 -Refer to Figure 19-1. Based on the Lorenz curves, which of the two countries do you believe fits better the definition of development?

Which of the following is a flaw in Malthus' population theory?

Economic growth implies

One reason why low-income countries lack physical capital is that poor countries have a hard time generating much domestic savings, since living standards are so low.

The Kuznets hypothesis, discussed in the Case in Point titled "(Growth and Development) or (Growth or Development)," argued that at low levels of per capita income, increases in income would likely

The World Bank, an international organization designed to support economic development, classifies countries according to their levels of per capita gross national income. Countries with per capita incomes of $935 or less in 2007 were classified as

What is economic development and how is it different from economic growth? Is it possible to have economic development without economic growth? Explain.

Which of the following is an obstacle poor countries face in seeking development finance funds from foreign savers?

The World Bank predicts that world population growth during the 2005 to 2015 period will be

The Gender Development Index (GDI)

The World Bank, an international organization designed to support economic development, classifies countries according to their levels of per capita gross national income. Countries with per capita incomes of $11,456 or more in 2007 were classified as

Compared to middle- and high-income countries, low-income countries are often characterized by

Economic growth alone is an adequate yardstick for a country's level of development.

To facilitate an international comparison of standards of living, the World Bank compares incomes and converts currencies to dollars on the basis of purchasing power. This measure is reported in

The common traits shared by the newly industrializing economies of the Pacific Rim that have experienced rapid economic growth include

One reason why low-income countries lack physical capital is

Dependency theory holds that the industrialized nations control the destiny of the Jdeveloping nations. Explain the rationale for this argument.

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

Exam 19: Economic Development

Grants in the form of foreign aid from the developed nations constitute the largest portion of funding for infrastructure development in poor countries.

Between 1965 and 1980, the world population grew at an annual rate of 2%. Using the rule of 72, population is expected to double in

Figure 19-1 -Refer to Figure 19-1. Based on the Lorenz curves, which of the two countries do you believe fits better the definition of development?

Which of the following is a flaw in Malthus' population theory?

Economic growth implies

One reason why low-income countries lack physical capital is that poor countries have a hard time generating much domestic savings, since living standards are so low.

The Kuznets hypothesis, discussed in the Case in Point titled "(Growth and Development) or (Growth or Development)," argued that at low levels of per capita income, increases in income would likely

The World Bank, an international organization designed to support economic development, classifies countries according to their levels of per capita gross national income. Countries with per capita incomes of $935 or less in 2007 were classified as

What is economic development and how is it different from economic growth? Is it possible to have economic development without economic growth? Explain.

Which of the following is an obstacle poor countries face in seeking development finance funds from foreign savers?

The World Bank predicts that world population growth during the 2005 to 2015 period will be

The Gender Development Index (GDI)

The World Bank, an international organization designed to support economic development, classifies countries according to their levels of per capita gross national income. Countries with per capita incomes of $11,456 or more in 2007 were classified as

Compared to middle- and high-income countries, low-income countries are often characterized by

Economic growth alone is an adequate yardstick for a country's level of development.

To facilitate an international comparison of standards of living, the World Bank compares incomes and converts currencies to dollars on the basis of purchasing power. This measure is reported in

The common traits shared by the newly industrializing economies of the Pacific Rim that have experienced rapid economic growth include

One reason why low-income countries lack physical capital is

Dependency theory holds that the industrialized nations control the destiny of the Jdeveloping nations. Explain the rationale for this argument.

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