Question 1

In order to achieve a high economic freedom rating, a country must:

Accepted Answer

A)  provide secure protection of privately owned property and evenhanded enforcement of contracts. 
B)  refrain from creating barriers that limit domestic and international trade. 
C)  rely more fully on markets rather than governments to allocate goods and resources. 
D)  do all of these. 
A)  provide secure protection of privately owned property and evenhanded enforcement of contracts. 
B)  refrain from creating barriers that limit domestic and international trade. 
C)  rely more fully on markets rather than governments to allocate goods and resources. 
D)  do all of these. D

Question 2

Compared to IACs, LDCs are often characterized by:

Accepted Answer

A)  lower life expectancy. 
B)  lower adult literacy. 
C)  lower per capita energy consumption. 
D)  All of these. 
A)  lower life expectancy. 
B)  lower adult literacy. 
C)  lower per capita energy consumption. 
D)  All of these. D

Question 3

Describe the vicious cycle of poverty. What are the consequences of this cycle?

Accepted Answer

The vicious cycle of poverty explains that the people in LDCs are poor because of a low level of investment in capital goods production, and the low level of investment is because the people are poor. The consequences are high infant mortality rates, low life expectancy, a low percentage of people using safe water, and a low percentage of school aged children in school.

Question 4

Political instability is a deterrent to long-term private investment.

Accepted Answer

A) True 
 B)False

Question 5

If an economy's population grows at 3 percent and GDP grows at 4 percent, then:

Accepted Answer

A)  per capita real GDP is declining. 
B)  the economy's standard of living is decreasing. 
C)  per capita real GDP is negative. 
D)  per capita real GDP is growing. 
E)  the economy is experiencing unemployment. 
A)  per capita real GDP is declining. 
B)  the economy's standard of living is decreasing. 
C)  per capita real GDP is negative. 
D)  per capita real GDP is growing. 
E)  the economy is experiencing unemployment.

Question 6

Which of the following makes short-term conditional low-interest loans to LDCs?

Accepted Answer

A)  World Bank. 
B)  Agency for International Development (AI
D) . 
C)  Agency for International Finance (AIF). 
D)  International Monetary Fund (IMF). 
A)  World Bank. 
B)  Agency for International Development (AI
D) . 
C)  Agency for International Finance (AIF). 
D)  International Monetary Fund (IMF).

Question 7

Which of the following would be most likely to encourage capital formation in a less-developed country?

Accepted Answer

A)  The expectation of sustained high inflation. 
B)  The expectation that property rights will be highly secure in the years ahead. 
C)  The imposition of high tariffs and other restraints limiting imports. 
D)  Higher personal and corporate tax rates. 
A)  The expectation of sustained high inflation. 
B)  The expectation that property rights will be highly secure in the years ahead. 
C)  The imposition of high tariffs and other restraints limiting imports. 
D)  Higher personal and corporate tax rates.

Question 8

If an economy's population grows at 3 percent and real GDP grows at 3 percent, then:

Accepted Answer

A)  per capita real GDP is declining. 
B)  the economy's standard of living is increasing. 
C)  per capita real GDP is negative. 
D)  per capita real GDP is constant. 
E)  the economy is experiencing unemployment. 
A)  per capita real GDP is declining. 
B)  the economy's standard of living is increasing. 
C)  per capita real GDP is negative. 
D)  per capita real GDP is constant. 
E)  the economy is experiencing unemployment.

Question 9

An industrially advanced country (IAC) is defined as a country with a GDP per capita among the top ____ countries in the world.

Accepted Answer

A)  5 
B)  10 
C)  20 
D)  27 
A)  5 
B)  10 
C)  20 
D)  27

Question 10

The vicious circle of poverty is the trap in which the LDC is too poor to save and therefore it cannot invest and remains poor.

Accepted Answer

A) True 
 B)False

Question 11

What role does population growth play in economic development?

Accepted Answer

Rapid population growth creates a high d

Question 12

When per capita real GDP is increasing, real output is growing:

Accepted Answer

A)  more rapidly than prices. 
B)  more rapidly than population. 
C)  less rapidly than prices. 
D)  less rapidly than population. 
A)  more rapidly than prices. 
B)  more rapidly than population. 
C)  less rapidly than prices. 
D)  less rapidly than population.

Question 13

The vicious circle of poverty refers to the fact that in LDCs,

Accepted Answer

A)  low living standards lead to declines in population growth. 
B)  too much spending leads to periods of recession. 
C)  people are poor because too much is spent on capital goods. 
D)  there are not enough people in the under-15 age groups. 
E)  poverty leads to low investment in capital goods. 
A)  low living standards lead to declines in population growth. 
B)  too much spending leads to periods of recession. 
C)  people are poor because too much is spent on capital goods. 
D)  there are not enough people in the under-15 age groups. 
E)  poverty leads to low investment in capital goods.

Question 14

Economists believe that political instability can facilitate economic development in an LDC by making its citizens more open to change and new technology.

Accepted Answer

A) True 
 B)False

Question 15

What is the economic criterion most often used to compare living standards across countries?

Accepted Answer

A)  Real GDP growth. 
B)  Unemployment rate. 
C)  Incidence of AIDS. 
D)  Rate of population growth. 
E)  Real per capita GDP. 
A)  Real GDP growth. 
B)  Unemployment rate. 
C)  Incidence of AIDS. 
D)  Rate of population growth. 
E)  Real per capita GDP.

Question 16

Which of the following is correct?

Accepted Answer

A)  Economic development is more quantitative than economic growth. 
B)  A country cannot achieve economic growth with a limited base of natural resources. 
C)  Infrastructure is capital provided by the private sector. 
D)  All of the above are true. 
E)  All of the above are false. 
A)  Economic development is more quantitative than economic growth. 
B)  A country cannot achieve economic growth with a limited base of natural resources. 
C)  Infrastructure is capital provided by the private sector. 
D)  All of the above are true. 
E)  All of the above are false.

Question 17

According to the text, Ireland and Israel are classified as industrially advanced countries (IACs).

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would be most likely to cause the per capita income of less-developed countries to rise?

Accepted Answer

A)  Development of strong labor unions. 
B)  More rapid population growth. 
C)  Investment expenditures that enhance the human capital of labor force participants. 
D)  An international minimum wage law. 
A)  Development of strong labor unions. 
B)  More rapid population growth. 
C)  Investment expenditures that enhance the human capital of labor force participants. 
D)  An international minimum wage law.

Question 19

Which of the following statements explains the vicious circle of poverty?

Accepted Answer

A)  By investing in education and infrastructure at the same time, the country can overcome the problems of poverty. 
B)  Poverty arises out of the lack of investment, but countries cannot invest because they are poor. 
C)  A nation can shift its production possibilities curve inward by shifting more resources into the production of capital goods. 
D)  A nation can shift its production possibilities curve outward by shifting more resources into the production of consumer goods. 
E)  There are dual economies in the world: Some are meant to be rich and others are meant to be poor. 
A)  By investing in education and infrastructure at the same time, the country can overcome the problems of poverty. 
B)  Poverty arises out of the lack of investment, but countries cannot invest because they are poor. 
C)  A nation can shift its production possibilities curve inward by shifting more resources into the production of capital goods. 
D)  A nation can shift its production possibilities curve outward by shifting more resources into the production of consumer goods. 
E)  There are dual economies in the world: Some are meant to be rich and others are meant to be poor.

Question 20

Which of the following provides the best explanation of why low-income countries generally remain poor?

Accepted Answer

A)  Their political environment and policies often discourage productive activity and reduce the potential gains from specialization and exchange. 
B)  They are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates. 
C)  They are poorly endowed with natural resources, which are essential for long-term rapid growth. 
D)  When the average income level is low, workers have little incentive to earn higher incomes. 
A)  Their political environment and policies often discourage productive activity and reduce the potential gains from specialization and exchange. 
B)  They are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates. 
C)  They are poorly endowed with natural resources, which are essential for long-term rapid growth. 
D)  When the average income level is low, workers have little incentive to earn higher incomes.

In order to achieve a high economic freedom rating, a country must:

Compared to IACs, LDCs are often characterized by:

Describe the vicious cycle of poverty. What are the consequences of this cycle?

Political instability is a deterrent to long-term private investment.

If an economy's population grows at 3 percent and GDP grows at 4 percent, then:

Which of the following makes short-term conditional low-interest loans to LDCs?

Which of the following would be most likely to encourage capital formation in a less-developed country?

If an economy's population grows at 3 percent and real GDP grows at 3 percent, then:

An industrially advanced country (IAC) is defined as a country with a GDP per capita among the top ____ countries in the world.

The vicious circle of poverty is the trap in which the LDC is too poor to save and therefore it cannot invest and remains poor.

What role does population growth play in economic development?

When per capita real GDP is increasing, real output is growing:

The vicious circle of poverty refers to the fact that in LDCs,

Economists believe that political instability can facilitate economic development in an LDC by making its citizens more open to change and new technology.

What is the economic criterion most often used to compare living standards across countries?

Which of the following is correct?

According to the text, Ireland and Israel are classified as industrially advanced countries (IACs).

Which of the following would be most likely to cause the per capita income of less-developed countries to rise?

Which of the following statements explains the vicious circle of poverty?

Which of the following provides the best explanation of why low-income countries generally remain poor?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Filters

Exam 17: Growth and the

In order to achieve a high economic freedom rating, a country must:

Compared to IACs, LDCs are often characterized by:

Describe the vicious cycle of poverty. What are the consequences of this cycle?

Political instability is a deterrent to long-term private investment.

If an economy's population grows at 3 percent and GDP grows at 4 percent, then:

Which of the following makes short-term conditional low-interest loans to LDCs?

Which of the following would be most likely to encourage capital formation in a less-developed country?

If an economy's population grows at 3 percent and real GDP grows at 3 percent, then:

An industrially advanced country (IAC) is defined as a country with a GDP per capita among the top ____ countries in the world.

The vicious circle of poverty is the trap in which the LDC is too poor to save and therefore it cannot invest and remains poor.

What role does population growth play in economic development?

When per capita real GDP is increasing, real output is growing:

The vicious circle of poverty refers to the fact that in LDCs,

Economists believe that political instability can facilitate economic development in an LDC by making its citizens more open to change and new technology.

What is the economic criterion most often used to compare living standards across countries?

Which of the following is correct?

According to the text, Ireland and Israel are classified as industrially advanced countries (IACs).

Which of the following would be most likely to cause the per capita income of less-developed countries to rise?

Which of the following statements explains the vicious circle of poverty?

Which of the following provides the best explanation of why low-income countries generally remain poor?

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Filters