Question 1

In recent years, a greater proportion of private capital ﬂows to DVCs has been direct foreign
investment rather than loans to DVC governments.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

One effective way that IACs can help DVCs is to lower trade barriers on products produced by
DVCs.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Explain the demographic transition view.

Accepted Answer

The demographic transition describes the

Question 6

Most economists agree that government efforts in economic development must be

Accepted Answer

A)  employed to substitute for private efforts. 
B)  designed to support private efforts. 
C)  the sole driver of economic development. 
D)  kept at a minimum because we can always rely on markets. 
A)  employed to substitute for private efforts. 
B)  designed to support private efforts. 
C)  the sole driver of economic development. 
D)  kept at a minimum because we can always rely on markets.

Question 7

Microcredit refers to

Accepted Answer

A)  small-size stock markets with very limited capitalization. 
B)  a system of providing credit to small-business owners. 
C)  bond markets for governments of small nations. 
D)  deposits in small banks in developing nations. 
A)  small-size stock markets with very limited capitalization. 
B)  a system of providing credit to small-business owners. 
C)  bond markets for governments of small nations. 
D)  deposits in small banks in developing nations.

Question 8

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 9

An institutional change that is needed in most developing nations is

Accepted Answer

A)  the will to develop. 
B)  reduced foreign aid. 
C)  birth control. 
D)  land reform. 
A)  the will to develop. 
B)  reduced foreign aid. 
C)  birth control. 
D)  land reform.

Question 10

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

Accepted Answer

A)  the use of capital-saving technology 
B)  development of natural resources 
C)  widespread political corruption 
D)  an increase in foreign aid 
A)  the use of capital-saving technology 
B)  development of natural resources 
C)  widespread political corruption 
D)  an increase in foreign aid

Question 11

The international agency that lends money to DVCs for economic development projects is the

Accepted Answer

A)  World Bank. 
B)  International Monetary Fund (IMF). 
C)  World Trade Organization (WTO). 
D)  World Credit Union. 
A)  World Bank. 
B)  International Monetary Fund (IMF). 
C)  World Trade Organization (WTO). 
D)  World Credit Union.

Question 12

The population growth rate in IACs (industrially advanced countries) in 2000-2010 averaged 0.7 percent per year. This compares to what percentage growth per year in low-income DVCs
(developing countries)?

Accepted Answer

A)  1.1 percent 
B)  2.1 percent 
C)  4.0 percent 
D)  0.4 percent 
A)  1.1 percent 
B)  2.1 percent 
C)  4.0 percent 
D)  0.4 percent

Question 13

Recent efforts at providing direct cash transfers to poor individuals in DVCs have shown which of the following results?

Accepted Answer

A)  Cash transfers never worked, because the recipients just wasted the money on unproductive spending. 
B)  These transfers have shown positive early results; the majority of the recipients spent the money as intended. 
C)  Only conditional cash transfers worked. Unconditional cash transfers never worked. 
D)  These cash transfers worked only if the aid providers frequently followed up on the recipients. 
A)  Cash transfers never worked, because the recipients just wasted the money on unproductive spending. 
B)  These transfers have shown positive early results; the majority of the recipients spent the money as intended. 
C)  Only conditional cash transfers worked. Unconditional cash transfers never worked. 
D)  These cash transfers worked only if the aid providers frequently followed up on the recipients.

Question 14

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 15

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 16

Which characteristic is most typical of human resources in developing nations?

Accepted Answer

A)  a small population base 
B)  low unemployment in urban areas 
C)  low unemployment in rural areas 
D)  high unemployment in urban areas 
A)  a small population base 
B)  low unemployment in urban areas 
C)  low unemployment in rural areas 
D)  high unemployment in urban areas

Question 17

A major criticism of foreign aid to developing nations is that it

Accepted Answer

A)  provides incentives to reduce the role of government. 
B)  is capital-using rather than capital-saving when it is spent. 
C)  encourages dependency rather than self-sustained growth. 
D)  leads to widespread underemployment and unemployment. 
A)  provides incentives to reduce the role of government. 
B)  is capital-using rather than capital-saving when it is spent. 
C)  encourages dependency rather than self-sustained growth. 
D)  leads to widespread underemployment and unemployment.

Question 18

The presence of large and fast-growing populations in developing countries contributes to lower
per capita incomes.

Accepted Answer

A) True 
 B)False

Question 19

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 20

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.

In recent years, a greater proportion of private capital ﬂows to DVCs has been direct foreign investment rather than loans to DVC governments.

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

One effective way that IACs can help DVCs is to lower trade barriers on products produced by DVCs.

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

Explain the demographic transition view.

Most economists agree that government efforts in economic development must be

Microcredit refers to

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

An institutional change that is needed in most developing nations is

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

The international agency that lends money to DVCs for economic development projects is the

The population growth rate in IACs (industrially advanced countries) in 2000-2010 averaged 0.7 percent per year. This compares to what percentage growth per year in low-income DVCs (developing countries)?

Recent efforts at providing direct cash transfers to poor individuals in DVCs have shown which of the following results?

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

Which characteristic is most typical of human resources in developing nations?

A major criticism of foreign aid to developing nations is that it

The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.

Infrastructure is best illustrated by

Microﬁnance or microcredit can help directly support

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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

Exam 22: The Economics of Developing Countries

In recent years, a greater proportion of private capital ﬂows to DVCs has been direct foreign investment rather than loans to DVC governments.

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

One effective way that IACs can help DVCs is to lower trade barriers on products produced by DVCs.

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

Explain the demographic transition view.

Most economists agree that government efforts in economic development must be

Microcredit refers to

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

An institutional change that is needed in most developing nations is

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

The international agency that lends money to DVCs for economic development projects is the

The population growth rate in IACs (industrially advanced countries) in 2000-2010 averaged 0.7 percent per year. This compares to what percentage growth per year in low-income DVCs (developing countries)?

Recent efforts at providing direct cash transfers to poor individuals in DVCs have shown which of the following results?

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

Which characteristic is most typical of human resources in developing nations?

A major criticism of foreign aid to developing nations is that it

The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.

Infrastructure is best illustrated by

Microﬁnance or microcredit can help directly support

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

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