Question 1

Investment in-kind refers to the possibility that

Accepted Answer

A) DVCs will invest for the purpose of becoming less dependent on world markets. 
B) a DVC will overinvest in industries in which it has a comparative advantage, disrupting its development program. 
C) newly established manufacturing firms may expand by reinvesting their profits. 
D) surplus labor in, say, agriculture can be diverted to the production of simple capital goods such as earthen dams. 
A) DVCs will invest for the purpose of becoming less dependent on world markets. 
B) a DVC will overinvest in industries in which it has a comparative advantage, disrupting its development program. 
C) newly established manufacturing firms may expand by reinvesting their profits. 
D) surplus labor in, say, agriculture can be diverted to the production of simple capital goods such as earthen dams.

Question 2

Capital flight is a problem facing DVCs that involves the

Accepted Answer

A) difficulty of sustaining skilled workers in the government sector of the DVC economies. 
B) transfer of private savings from DVCs to IACs. 
C) flight of agricultural workers from rural to urban areas, especially capital cities, to take advantage of better job opportunities. 
D) movement of capital goods from IACs to DVCs to avoid taxes. 
A) difficulty of sustaining skilled workers in the government sector of the DVC economies. 
B) transfer of private savings from DVCs to IACs. 
C) flight of agricultural workers from rural to urban areas, especially capital cities, to take advantage of better job opportunities. 
D) movement of capital goods from IACs to DVCs to avoid taxes.

Question 3

Studies generally show that if there is more investment in capital goods in DVCs, there will be greater

Accepted Answer

A) capital flight. 
B) economic growth. 
C) underemployment. 
D) unemployment. 
A) capital flight. 
B) economic growth. 
C) underemployment. 
D) unemployment.

Question 4

Which of these sets of nations consists of low-income developing nations?

Accepted Answer

A) Brazil, Australia, and South Africa 
B) Uganda, Madagascar, and Burkina Faso 
C) Canada, Switzerland, and France 
D) Germany, South Korea, and Mexico 
A) Brazil, Australia, and South Africa 
B) Uganda, Madagascar, and Burkina Faso 
C) Canada, Switzerland, and France 
D) Germany, South Korea, and Mexico

Question 5

According to the United Nations, approximately what percentage of the world's income is received by the richest one-fifth of the world's population?

Accepted Answer

A) 24 percent 
B) 38 percent 
C) 60 percent 
D) 75 percent 
A) 24 percent 
B) 38 percent 
C) 60 percent 
D) 75 percent

Question 6

The vicious circle of poverty is based on the connections between low income, low saving, low investment, and low productivity.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following countries had the best score in the Corruption Perception Index in 2015?

Accepted Answer

A) Japan 
B) China 
C) United States 
D) Canada 
A) Japan 
B) China 
C) United States 
D) Canada

Question 8

Infrastructure is best illustrated by

Accepted Answer

A) farm equipment. 
B) school buildings and highways. 
C) machinery and equipment for the production of consumer goods. 
D) government tax revenues. 
A) farm equipment. 
B) school buildings and highways. 
C) machinery and equipment for the production of consumer goods. 
D) government tax revenues.

Question 9

Avenues for the government to foster economic growth and development include the following, except

Accepted Answer

A) nationalization and protection of domestic industries. 
B) establishing the rule of law and protection of property rights. 
C) building infrastructure and technological support. 
D) building human capital and entrepreneurship. 
A) nationalization and protection of domestic industries. 
B) establishing the rule of law and protection of property rights. 
C) building infrastructure and technological support. 
D) building human capital and entrepreneurship.

Question 10

Most of the DVCs find it difficult to accumulate capital goods because

Accepted Answer

A) the terms of trade prohibit the inflow of private capital from the advanced nations. 
B) it is very difficult to restrict consumption and thus to free resources for capital goods production. 
C) domestic monetary policies designed to achieve price stability result in low interest rates, thereby discouraging investment. 
D) investment is interest inelastic in DVCs. 
A) the terms of trade prohibit the inflow of private capital from the advanced nations. 
B) it is very difficult to restrict consumption and thus to free resources for capital goods production. 
C) domestic monetary policies designed to achieve price stability result in low interest rates, thereby discouraging investment. 
D) investment is interest inelastic in DVCs.

Question 11

Which of the following is typically not a problem for low-income DVCs?

Accepted Answer

A) capital flight 
B) "brain drain" 
C) high saving rates that slow aggregate demand growth 
D) poor infrastructure 
A) capital flight 
B) "brain drain" 
C) high saving rates that slow aggregate demand growth 
D) poor infrastructure

Question 12

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

Accepted Answer

A) The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC. 
B) Capital flight reduces investment opportunities and the need for saving in DVCs. 
C) There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving. 
D) The domestic output of DVCs is so low that the absolute volume of saving is small. 
A) The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC. 
B) Capital flight reduces investment opportunities and the need for saving in DVCs. 
C) There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving. 
D) The domestic output of DVCs is so low that the absolute volume of saving is small.

Question 13

Which of these sets of nations consists of high-income economies?

Accepted Answer

A) Brazil, Thailand, and South Africa 
B) China, India, and Russia 
C) Canada, Switzerland, and France 
D) United States, South Korea, and Mexico 
A) Brazil, Thailand, and South Africa 
B) China, India, and Russia 
C) Canada, Switzerland, and France 
D) United States, South Korea, and Mexico

Question 14

Rapid population growth can be an obstacle to economic development

Accepted Answer

A) because it can translate a relatively large increase in real output into a small increase in real output per capita. 
B) because more investment will be required to simply maintain the quantity of capital goods per person. 
C) because it may lead to the overutilization and therefore ecological degradation of farmland. 
D) for all of these reasons. 
A) because it can translate a relatively large increase in real output into a small increase in real output per capita. 
B) because more investment will be required to simply maintain the quantity of capital goods per person. 
C) because it may lead to the overutilization and therefore ecological degradation of farmland. 
D) for all of these reasons.

Question 15

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. 
A) low rates of saving. 
B) inadequacy of public capital goods (infrastructure). 
C) political instability. 
D) expensive labor.

Question 16

Capital flight refers to

Accepted Answer

A) the tendency of large corporations of IACs to build new plants in the DVCs because labor is cheaper. 
B) DVC citizens accumulating or investing their savings in the IACs. 
C) the high international mobility of speculative funds caused by variations in exchange rates. 
D) the tendency of DVCs to overinvest in commercial aircraft. 
A) the tendency of large corporations of IACs to build new plants in the DVCs because labor is cheaper. 
B) DVC citizens accumulating or investing their savings in the IACs. 
C) the high international mobility of speculative funds caused by variations in exchange rates. 
D) the tendency of DVCs to overinvest in commercial aircraft.

Question 17

An increasing share of the private capital flows to DVCs in recent years has been in the form of

Accepted Answer

A) interest-free government loans. 
B) educational and training assistance. 
C) direct foreign investment. 
D) bank loans. 
A) interest-free government loans. 
B) educational and training assistance. 
C) direct foreign investment. 
D) bank loans.

Question 18

Many of the major projects of the World Bank have been for

Accepted Answer

A) making loans to private citizens. 
B) building infrastructure in a nation. 
C) supervising the banking system in DVCs. 
D) establishing new tax systems for governments in DVCs. 
A) making loans to private citizens. 
B) building infrastructure in a nation. 
C) supervising the banking system in DVCs. 
D) establishing new tax systems for governments in DVCs.

Question 19

The corruption and poor administration that are common to the public sectors of many DVCs suggest that government may not be very effective in promoting economic growth.

Accepted Answer

A) True 
 B)False

Question 20

Which of the given nations would be high-income countries (IACs), according to the World Bank?

Accepted Answer

A) country C only 
B) countries B, C, and D 
C) countries B, C, D, and E 
D) countries B and C 
A) country C only 
B) countries B, C, and D 
C) countries B, C, D, and E 
D) countries B and C

Exam 22: The Economics of Developing Countries

Investment in-kind refers to the possibility that

Capital flight is a problem facing DVCs that involves the

Studies generally show that if there is more investment in capital goods in DVCs, there will be greater

Which of these sets of nations consists of low-income developing nations?

According to the United Nations, approximately what percentage of the world's income is received by the richest one-fifth of the world's population?

The vicious circle of poverty is based on the connections between low income, low saving, low investment, and low productivity.

Which of the following countries had the best score in the Corruption Perception Index in 2015?

Infrastructure is best illustrated by

Avenues for the government to foster economic growth and development include the following, except

Most of the DVCs find it difficult to accumulate capital goods because

Which of the following is typically not a problem for low-income DVCs?

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

Which of these sets of nations consists of high-income economies?

Rapid population growth can be an obstacle to economic development

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

Capital flight refers to

An increasing share of the private capital flows to DVCs in recent years has been in the form of

Many of the major projects of the World Bank have been for

The corruption and poor administration that are common to the public sectors of many DVCs suggest that government may not be very effective in promoting economic growth.

Which of the given nations would be high-income countries (IACs), according to the World Bank?

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

Filters