Question 1

The demographic transition concept suggests that

Accepted Answer

A) effective birth control is the primary prerequisite of DVC income growth. 
B) income growth must first occur before DVC birth rates will decline. 
C) children are economic assets in the IACs but economic liabilities in the DVCs. 
D) the IACs will have higher birth rates than the DVCs. 
A) effective birth control is the primary prerequisite of DVC income growth. 
B) income growth must first occur before DVC birth rates will decline. 
C) children are economic assets in the IACs but economic liabilities in the DVCs. 
D) the IACs will have higher birth rates than the DVCs.

Question 2

Which of the following factors contributes most to the high per capita incomes in developed nations?

Accepted Answer

A) high rates of population growth 
B) high rates of economic growth 
C) low rates of investment 
D) low rates of saving 
A) high rates of population growth 
B) high rates of economic growth 
C) low rates of investment 
D) low rates of saving

Question 3

In 2014, the IACs (industrially advanced countries) had an average per capita income that was about 60 times as high as that of the low-income nations.

Accepted Answer

A) True 
 B)False

Question 4

Developing nations tend to have a large entrepreneurial class but not sufficient capital investment.

Accepted Answer

A) True 
 B)False

Question 5

The World Bank is the organization to which DVCs turn as a "last-resort" lending agency for projects that private institutions will not fund.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Population expansion can impede economic development for the following reasons except

Accepted Answer

A) reduced saving and investment rates. 
B) reduced productivity of labor. 
C) a larger supply of labor. 
D) its contribution to urban congestion and problems. 
A) reduced saving and investment rates. 
B) reduced productivity of labor. 
C) a larger supply of labor. 
D) its contribution to urban congestion and problems.

Question 8

Which of the following is not a way for industrially advanced countries (IACs) to help developing countries (DVCs) achieve faster economic growth?

Accepted Answer

A) expanding trade 
B) admitting more temporary workers 
C) subsidizing their own (i.e., the IACsâ€™) agricultural sectors 
D) discouraging arms sales 
A) expanding trade 
B) admitting more temporary workers 
C) subsidizing their own (i.e., the IACsâ€™) agricultural sectors 
D) discouraging arms sales

Question 9

A large portion of foreign aid from IACs to DVCs is provided on the basis of

Accepted Answer

A) economic considerations. 
B) geographical considerations. 
C) humanitarian considerations. 
D) politico-military considerations. 
A) economic considerations. 
B) geographical considerations. 
C) humanitarian considerations. 
D) politico-military considerations.

Question 10

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 11

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

Accepted Answer

A) Italy 
B) China 
C) Mexico 
D) Russia 
A) Italy 
B) China 
C) Mexico 
D) Russia

Question 12

The levels of national income per capita among developing countries (DVCs) are

Accepted Answer

A) all within a narrow range. 
B) widely varied. 
C) all growing rapidly. 
D) about half of those of industrially advanced countries (IACs). 
A) all within a narrow range. 
B) widely varied. 
C) all growing rapidly. 
D) about half of those of industrially advanced countries (IACs).

Question 13

Which of the following is not a DVC policy likely to increase DVC economic growth?

Accepted Answer

A) encouraging direct foreign investment 
B) opening economics to world trade 
C) establishing independent central banks 
D) encouraging emigration of highly skilled workers 
A) encouraging direct foreign investment 
B) opening economics to world trade 
C) establishing independent central banks 
D) encouraging emigration of highly skilled workers

Question 14

Which of the following would most help a developing country (DVC) break out of the vicious circle of poverty?

Accepted Answer

A) more consumption 
B) more food production 
C) an increase in the birth rate 
D) an increase in labor productivity 
A) more consumption 
B) more food production 
C) an increase in the birth rate 
D) an increase in labor productivity

Question 15

The absolute income gap between the IACs and the DVCs has

Accepted Answer

A) remained constant over time. 
B) increased over time. 
C) decreased over time. 
D) increased in nominal terms but decreased in real terms. 
A) remained constant over time. 
B) increased over time. 
C) decreased over time. 
D) increased in nominal terms but decreased in real terms.

Question 16

Which of the following describes the vicious circle of poverty?

Accepted Answer

A) Government spending for public goods is inflationary, and this undermines incentives to save and invest. 
B) Higher incomes increase consumption at the expense of capital accumulation, which causes income to fall. 
C) Low per capita incomes cause low levels of saving and investment, which mean low productivity and therefore low incomes. 
D) A growing national income increases the demand for money, which increases the interest rate and reduces investment. 
A) Government spending for public goods is inflationary, and this undermines incentives to save and invest. 
B) Higher incomes increase consumption at the expense of capital accumulation, which causes income to fall. 
C) Low per capita incomes cause low levels of saving and investment, which mean low productivity and therefore low incomes. 
D) A growing national income increases the demand for money, which increases the interest rate and reduces investment.

Question 17

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 18

To be classified as a low-income developing country, annual per capita income in 2014 needed to be

Accepted Answer

A) $1,045 or less. 
B) $628 or less. 
C) $2,018 or less. 
D) $925 or less. 
A) $1,045 or less. 
B) $628 or less. 
C) $2,018 or less. 
D) $925 or less.

Question 19

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 20

At the beginning of the year, one developing country (DVC) has a real income per capita of $800.In a developed country (IAC), the real income per capita is $30,000.Both countries experience a 4 percent growth rate for the year.At the end of the year, the absolute income gap between these two countries will have increased from $29,200 to

Accepted Answer

A) $30,368. 
B) $31,200. 
C) $30,120. 
D) $32,032. 
A) $30,368. 
B) $31,200. 
C) $30,120. 
D) $32,032.

Exam 42: The Economics of Developing Countries

The demographic transition concept suggests that

Which of the following factors contributes most to the high per capita incomes in developed nations?

In 2014, the IACs (industrially advanced countries) had an average per capita income that was about 60 times as high as that of the low-income nations.

Developing nations tend to have a large entrepreneurial class but not sufficient capital investment.

The World Bank is the organization to which DVCs turn as a "last-resort" lending agency for projects that private institutions will not fund.

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

Population expansion can impede economic development for the following reasons except

Which of the following is not a way for industrially advanced countries (IACs) to help developing countries (DVCs) achieve faster economic growth?

A large portion of foreign aid from IACs to DVCs is provided on the basis of

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

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

The levels of national income per capita among developing countries (DVCs) are

Which of the following is not a DVC policy likely to increase DVC economic growth?

Which of the following would most help a developing country (DVC) break out of the vicious circle of poverty?

The absolute income gap between the IACs and the DVCs has

Which of the following describes the vicious circle of poverty?

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?

To be classified as a low-income developing country, annual per capita income in 2014 needed to be

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?

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

Filters