Question 1

Which of the following is most characteristic of developing nations?

Accepted Answer

A) a small percentage of the labor force in agriculture 
B) a relatively equitable distribution of income 
C) low levels of labor productivity 
D) low rates of population growth 
A) a small percentage of the labor force in agriculture 
B) a relatively equitable distribution of income 
C) low levels of labor productivity 
D) low rates of population growth

Question 2

A factor that limits the amount of saving in developing countries is the fact that

Accepted Answer

A) the banking system does not encourage saving. 
B) there is too much foreign aid, so savings is not needed. 
C) the level of aggregate domestic output is low. 
D) the government controls financial institutions and makes it difficult for people to save. 
A) the banking system does not encourage saving. 
B) there is too much foreign aid, so savings is not needed. 
C) the level of aggregate domestic output is low. 
D) the government controls financial institutions and makes it difficult for people to save.

Question 3

Saving is a larger percentage of domestic output in DVCs than in IACs, but the saving is put to poor use.

Accepted Answer

A) True 
 B)False

Question 4

In the 1990s,

Accepted Answer

A) direct private investment to the DVCs increased, and government-provided foreign aid decreased. 
B) both direct private investment and government-provided foreign aid to the DVCs increased. 
C) both direct private investment and government-provided foreign aid to the DVCs decreased. 
D) direct private investment to the DVCs decreased, and government-provided foreign aid increased. 
A) direct private investment to the DVCs increased, and government-provided foreign aid decreased. 
B) both direct private investment and government-provided foreign aid to the DVCs increased. 
C) both direct private investment and government-provided foreign aid to the DVCs decreased. 
D) direct private investment to the DVCs decreased, and government-provided foreign aid increased.

Question 5

Which of the following is most characteristic of most developing nations?

Accepted Answer

A) roughly equal distribution of income among the population 
B) high levels of labor productivity in agriculture 
C) low propensity to consume goods and services 
D) low levels of saving and investment 
A) roughly equal distribution of income among the population 
B) high levels of labor productivity in agriculture 
C) low propensity to consume goods and services 
D) low levels of saving and investment

Question 6

Most of the flow of foreign aid goes to

Accepted Answer

A) the poorest of developing countries (DVCs). 
B) the most affluent of the developing country populations. 
C) the smallest developing countries. 
D) about 70 percent of the world's poorest people. 
A) the poorest of developing countries (DVCs). 
B) the most affluent of the developing country populations. 
C) the smallest developing countries. 
D) about 70 percent of the world's poorest people.

Question 7

An IAC (industrially advanced country) had a per capita income of $28,200, while a DVC (developing country) had a per capita income of $1,200 in a given year.If both countries experience a per-capita-income growth of 2 percent, then their respective per-capita-income levels one year later will become

Accepted Answer

A) $33,840 and $1,440. 
B) $28,764 and $1,224. 
C) $33,840 and $1,224. 
D) $28,764 and $1,440. 
A) $33,840 and $1,440. 
B) $28,764 and $1,224. 
C) $33,840 and $1,224. 
D) $28,764 and $1,440.

Question 8

The "brain drain" problem in the DVCs refers to the fact the best-educated workers

Accepted Answer

A) are reluctant to become entrepreneurs. 
B) are concentrated in rural areas where their skills are underutilized. 
C) often immigrate to industrialized countries. 
D) are reluctant to work in the public sector. 
A) are reluctant to become entrepreneurs. 
B) are concentrated in rural areas where their skills are underutilized. 
C) often immigrate to industrialized countries. 
D) are reluctant to work in the public sector.

Question 9

The demographic transition view of population and growth in DVCs is that

Accepted Answer

A) the most important factor affecting population growth in DVCs is demographic changes among the elderly. 
B) slower population growth is neither desirable nor productive for DVCs given the state of the economies in these nations. 
C) reduced birth rates must come first in DVCs, and then higher per capita incomes will follow. 
D) higher per capita incomes must come first in DVCs, and then reduced birth rates will follow. 
A) the most important factor affecting population growth in DVCs is demographic changes among the elderly. 
B) slower population growth is neither desirable nor productive for DVCs given the state of the economies in these nations. 
C) reduced birth rates must come first in DVCs, and then higher per capita incomes will follow. 
D) higher per capita incomes must come first in DVCs, and then reduced birth rates will follow.

Question 10

Government-provided foreign aid to developing countries

Accepted Answer

A) has averaged about 1 percent of the IACs' GDP each year. 
B) has increased sharply and steadily since 1995. 
C) has dwarfed the size of foreign direct investment to the DVCs in recent years. 
D) declined in the late 1990s but increased from 2000 to 2008. 
A) has averaged about 1 percent of the IACs' GDP each year. 
B) has increased sharply and steadily since 1995. 
C) has dwarfed the size of foreign direct investment to the DVCs in recent years. 
D) declined in the late 1990s but increased from 2000 to 2008.

Question 11

A recommended policy for developing countries to stimulate economic growth would be

Accepted Answer

A) abolishing central banks. 
B) more central planning by government. 
C) encouraging more direct foreign investment. 
D) expanding employment in state industries. 
A) abolishing central banks. 
B) more central planning by government. 
C) encouraging more direct foreign investment. 
D) expanding employment in state industries.

Question 12

Microfinance or microcredit can help directly support

Accepted Answer

A) labor or workers. 
B) local governments. 
C) entrepreneurs. 
D) consumers. 
A) labor or workers. 
B) local governments. 
C) entrepreneurs. 
D) consumers.

Question 13

In 2014, the GDP of the United States was approximately

Accepted Answer

A) $8 trillion less than the GDP of the 135 DVCs in that year. 
B) $8 trillion more than the GDP of the 135 DVCs in that year. 
C) twice the GDP of the 135 DVCs in that year. 
D) the same as the GDP of 135 DVCs in that year. 
A) $8 trillion less than the GDP of the 135 DVCs in that year. 
B) $8 trillion more than the GDP of the 135 DVCs in that year. 
C) twice the GDP of the 135 DVCs in that year. 
D) the same as the GDP of 135 DVCs in that year.

Question 14

One reason why foreign aid is viewed as harmful is that it promotes dependency.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a major obstacle to economic growth in DVCs?

Accepted Answer

A) a fall in population growth 
B) a decline in demographic transition 
C) the low demand for natural resources 
D) the low supply of saving 
A) a fall in population growth 
B) a decline in demographic transition 
C) the low demand for natural resources 
D) the low supply of saving

Question 16

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 17

In recent years, many DVCs have come to realize that

Accepted Answer

A) expanded international trade is harmful to DVCs. 
B) private capital investment is essential for economic growth in DVCs. 
C) the International Monetary Fund is the major institutional barrier to economic growth. 
D) government involvement in economic development is the only avenue for economic growth. 
A) expanded international trade is harmful to DVCs. 
B) private capital investment is essential for economic growth in DVCs. 
C) the International Monetary Fund is the major institutional barrier to economic growth. 
D) government involvement in economic development is the only avenue for economic growth.

Question 18

The ability of the DVCs to use the technologies of the IACs is somewhat limited because

Accepted Answer

A) the IACs have patents on most of their technologies. 
B) the IACs and the DVCs have much different resource endowments. 
C) the technologies of the IACs rely heavily on unskilled labor. 
D) IAC technologies are labor-intensive, while DVC technologies are capital-intensive. 
A) the IACs have patents on most of their technologies. 
B) the IACs and the DVCs have much different resource endowments. 
C) the technologies of the IACs rely heavily on unskilled labor. 
D) IAC technologies are labor-intensive, while DVC technologies are capital-intensive.

Question 19

Which of the following countries had the highest per capita income (on a purchasing power parity basis) in 2014?

Accepted Answer

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

Question 20

To stimulate economic growth, it would be best if developing countries adopted policies to

Accepted Answer

A) discourage foreign investment. 
B) subsidize state industries. 
C) build more human capital. 
D) increase population growth. 
A) discourage foreign investment. 
B) subsidize state industries. 
C) build more human capital. 
D) increase population growth.

Exam 42: The Economics of Developing Countries

Which of the following is most characteristic of developing nations?

A factor that limits the amount of saving in developing countries is the fact that

Saving is a larger percentage of domestic output in DVCs than in IACs, but the saving is put to poor use.

In the 1990s,

Which of the following is most characteristic of most developing nations?

Most of the flow of foreign aid goes to

The "brain drain" problem in the DVCs refers to the fact the best-educated workers

The demographic transition view of population and growth in DVCs is that

Government-provided foreign aid to developing countries

A recommended policy for developing countries to stimulate economic growth would be

Microfinance or microcredit can help directly support

In 2014, the GDP of the United States was approximately

One reason why foreign aid is viewed as harmful is that it promotes dependency.

Which of the following is a major obstacle to economic growth in DVCs?

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

In recent years, many DVCs have come to realize that

The ability of the DVCs to use the technologies of the IACs is somewhat limited because

Which of the following countries had the highest per capita income (on a purchasing power parity basis) in 2014?

To stimulate economic growth, it would be best if developing countries adopted policies to

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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