Question 1

A reason for placing special emphasis on capital accumulation in developing countries is the high

Accepted Answer

A) level of adult illiteracy. 
B) productivity of workers in DVCs. 
C) marginal benefits of capital goods. 
D) level of import quotas and tariffs. 
A) level of adult illiteracy. 
B) productivity of workers in DVCs. 
C) marginal benefits of capital goods. 
D) level of import quotas and tariffs.

Question 2

Assume that the real output of a developing nation increases from $120 billion to $140 billion, while its population expands from 100 to 110 million.As a result, real income per capita has increased by about

Accepted Answer

A) $56 per person. 
B) $64 per person. 
C) $72 per person. 
D) $88 per person. 
A) $56 per person. 
B) $64 per person. 
C) $72 per person. 
D) $88 per person.

Question 3

Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC.If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will

Accepted Answer

A) remain unchanged at $19,000. 
B) increase by $760. 
C) decrease by $1,000. 
D) increase by $19,760. 
A) remain unchanged at $19,000. 
B) increase by $760. 
C) decrease by $1,000. 
D) increase by $19,760.

Question 4

Which of the following statements is correct?

Accepted Answer

A) Saving is high in less-developed nations because the opportunities for consumption are limited. 
B) For developing nations, the annual rate of population increase is about 5 percent. 
C) Most of the labor forces of developing nations are engaged in light industrial production. 
D) Investment is low in developing nations, making it difficult to increase productivity and incomes. 
A) Saving is high in less-developed nations because the opportunities for consumption are limited. 
B) For developing nations, the annual rate of population increase is about 5 percent. 
C) Most of the labor forces of developing nations are engaged in light industrial production. 
D) Investment is low in developing nations, making it difficult to increase productivity and incomes.

Question 5

DVCs tend to have permanent shortages of farm labor.

Accepted Answer

A) True 
 B)False

Question 6

Development experts are less enthusiastic than they used to be about three decades ago about the positive role of DVC governments in promoting economic growth in their less- developed nations because of the

Accepted Answer

A) corruption in government. 
B) availability of foreign aid. 
C) need for a greater tax collection. 
D) need for more public capital goods. 
A) corruption in government. 
B) availability of foreign aid. 
C) need for a greater tax collection. 
D) need for more public capital goods.

Question 7

Which of the following is a factor limiting saving in DVCs?

Accepted Answer

A) the lack of foreign aid and loans from the World Bank 
B) Governments control the banking system and set low interest rates. 
C) the flight of private savings to investments in IACs, where there is less risk 
D) Those who do save make their savings available only to their families, who use it for consumption. 
A) the lack of foreign aid and loans from the World Bank 
B) Governments control the banking system and set low interest rates. 
C) the flight of private savings to investments in IACs, where there is less risk 
D) Those who do save make their savings available only to their families, who use it for consumption.

Question 8

The building of a new factory by a corporation would be an example of increasing the infrastructure in a developing nation.

Accepted Answer

A) True 
 B)False

Question 9

A major complaint of DVCs about foreign aid from IACs is that it

Accepted Answer

A) is allocated just to the poorest nations. 
B) is equally borne by the donor nations. 
C) needs to be quantitatively larger for DVCs. 
D) takes too long a time to reach DVCs. 
A) is allocated just to the poorest nations. 
B) is equally borne by the donor nations. 
C) needs to be quantitatively larger for DVCs. 
D) takes too long a time to reach DVCs.

Question 10

The capricious universe view is the idea that the IACs are exploiting the DVCs.

Accepted Answer

A) True 
 B)False

Question 11

Reduction of tariff barriers against DVC imports would benefit both the DVCs and the IACs.

Accepted Answer

A) True 
 B)False

Question 12

The World Bank operates primarily as a

Accepted Answer

A) deposit institution for nations' gold supplies. 
B) coordinator for private banks in major nations. 
C) lender of last resort to less-developed nations. 
D) U.S.government agency that supervises banks worldwide. 
A) deposit institution for nations' gold supplies. 
B) coordinator for private banks in major nations. 
C) lender of last resort to less-developed nations. 
D) U.S.government agency that supervises banks worldwide.

Question 13

Japan is a nation that achieved a high standard of living despite having a very limited supply of natural resources.

Accepted Answer

A) True 
 B)False

Question 14

In recent decades,

Accepted Answer

A) all countries classified as DVCs have had little or no economic growth. 
B) some nations classified as DVCs have grown rapidly, while others have grown very slowly or not at all. 
C) all countries classified as DVCs have experienced rapid economic growth and rising living standards. 
D) all countries classified as low-income DVCs have had declining per capita GDPs. 
A) all countries classified as DVCs have had little or no economic growth. 
B) some nations classified as DVCs have grown rapidly, while others have grown very slowly or not at all. 
C) all countries classified as DVCs have experienced rapid economic growth and rising living standards. 
D) all countries classified as low-income DVCs have had declining per capita GDPs.

Question 15

Many countries remain poor because they currently are poor.This statement summarizes the

Accepted Answer

A) infrastructure problem. 
B) vicious circle of poverty. 
C) demographic transition problem. 
D) problem of capital flight. 
A) infrastructure problem. 
B) vicious circle of poverty. 
C) demographic transition problem. 
D) problem of capital flight.

Question 16

An advantage of direct foreign investment (compared to foreign loans) is that management skill and technological knowledge often accompany such capital flows.

Accepted Answer

A) True 
 B)False

Question 17

The demographic transition view of population growth believes that slower population growth will lead to rising incomes.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Low-income developing countries generally have the following characteristics except

Accepted Answer

A) low population growth rates. 
B) low levels of industrialization. 
C) dependency on exports of agricultural products or raw materials. 
D) minimal amounts of capital resources. 
A) low population growth rates. 
B) low levels of industrialization. 
C) dependency on exports of agricultural products or raw materials. 
D) minimal amounts of capital resources.

Question 20

The richest 20 percent of the world's population receives more than 75 percent of the world's income, while the poorest 20 percent receives less than 2 percent of the world's income.

Accepted Answer

A) True 
 B)False

Exam 42: The Economics of Developing Countries

A reason for placing special emphasis on capital accumulation in developing countries is the high

Assume that the real output of a developing nation increases from $120 billion to $140 billion, while its population expands from 100 to 110 million.As a result, real income per capita has increased by about

Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC.If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will

Which of the following statements is correct?

DVCs tend to have permanent shortages of farm labor.

Development experts are less enthusiastic than they used to be about three decades ago about the positive role of DVC governments in promoting economic growth in their less- developed nations because of the

Which of the following is a factor limiting saving in DVCs?

The building of a new factory by a corporation would be an example of increasing the infrastructure in a developing nation.

A major complaint of DVCs about foreign aid from IACs is that it

The capricious universe view is the idea that the IACs are exploiting the DVCs.

Reduction of tariff barriers against DVC imports would benefit both the DVCs and the IACs.

The World Bank operates primarily as a

Japan is a nation that achieved a high standard of living despite having a very limited supply of natural resources.

In recent decades,

Many countries remain poor because they currently are poor.This statement summarizes the

An advantage of direct foreign investment (compared to foreign loans) is that management skill and technological knowledge often accompany such capital flows.

The demographic transition view of population growth believes that slower population growth will lead to rising incomes.

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.

Low-income developing countries generally have the following characteristics except

The richest 20 percent of the world's population receives more than 75 percent of the world's income, while the poorest 20 percent receives less than 2 percent of the world's income.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

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