Question 1

Quotas are designed to:

Accepted Answer

A)  restrict export of domestic goods to foreign markets. 
B)  protect domestic producers from higher sales taxes. 
C)  increase foreign demand for domestic products. 
D)  increase domestic demand for foreign products. 
E)  protect domestic producers from foreign competition. 
A)  restrict export of domestic goods to foreign markets. 
B)  protect domestic producers from higher sales taxes. 
C)  increase foreign demand for domestic products. 
D)  increase domestic demand for foreign products. 
E)  protect domestic producers from foreign competition.

Question 2

No government that receives foreign aid sells products to its people.

Accepted Answer

A) True 
 B)False

Question 3

An inward-oriented strategy is designed to:

Accepted Answer

A)  expand a country's export capacity. 
B)  increase production of goods in which the domestic economy has an absolute advantage. 
C)  develop the domestic manufacturing sector. 
D)  eliminate any trade with foreign nations. 
E)  improve productivity in the domestic service sector. 
A)  expand a country's export capacity. 
B)  increase production of goods in which the domestic economy has an absolute advantage. 
C)  develop the domestic manufacturing sector. 
D)  eliminate any trade with foreign nations. 
E)  improve productivity in the domestic service sector.

Question 4

Which of the following is a basic human need?

Accepted Answer

A)  Transportation 
B)  Healthcare 
C)  Money for gas 
D)  College level education 
E)  Savings 
A)  Transportation 
B)  Healthcare 
C)  Money for gas 
D)  College level education 
E)  Savings

Question 5

In many less-developed countries, per capita GDP falls even though real GDP rises, because:

Accepted Answer

A)  output grows at a slower rate than the population. 
B)  the GDP measures in developing countries are always inaccurate. 
C)  consumption spending exceeds investment spending. 
D)  these countries face an acute trade deficit. 
E)  prices increase faster than increase in actual output level. 
A)  output grows at a slower rate than the population. 
B)  the GDP measures in developing countries are always inaccurate. 
C)  consumption spending exceeds investment spending. 
D)  these countries face an acute trade deficit. 
E)  prices increase faster than increase in actual output level.

Question 6

Which of the following limit the direct creation of new jobs through foreign investment?

Accepted Answer

A)  Availability of large number of unemployed workers 
B)  Nature of the industries in which investment is allowed 
C)  Low cost of setting up the capital-intensive industries 
D)  High percentage of youth in the country's population 
E)  Regulation on technology transfer 
A)  Availability of large number of unemployed workers 
B)  Nature of the industries in which investment is allowed 
C)  Low cost of setting up the capital-intensive industries 
D)  High percentage of youth in the country's population 
E)  Regulation on technology transfer

Question 7

Capital shallowing occurs because old capital depreciates, or becomes completely obsolete with the passage of time.

Accepted Answer

A) True 
 B)False

Question 8

Mexico and India have a fairly large number of engineers and technical personnel, which means that new technology can be adapted relatively quickly.

Accepted Answer

A) True 
 B)False

Question 9

The Taiwanese government allows tax credits for domestic producers who compete with manufacturers in First World nations. This suggests that Taiwan engages in _____.

Accepted Answer

A)  trade protectionism 
B)  export substitution 
C)  foreign exchange market intervention 
D)  import substitution 
E)  voluntary export restrictions 
A)  trade protectionism 
B)  export substitution 
C)  foreign exchange market intervention 
D)  import substitution 
E)  voluntary export restrictions

Question 10

In absolute terms, poverty is measured as:

Accepted Answer

A)  an index number on the quality-of-life index. 
B)  the ratio of family income to family size. 
C)  a specific value of family food consumption. 
D)  the ratio of total population to national income. 
E)  a specific value of per capita GNP. 
A)  an index number on the quality-of-life index. 
B)  the ratio of family income to family size. 
C)  a specific value of family food consumption. 
D)  the ratio of total population to national income. 
E)  a specific value of per capita GNP.

Question 11

Import quotas are aimed at increasing the quality of domestic products.

Accepted Answer

A) True 
 B)False

Question 12

The existence of dual economies supports the argument for _____.

Accepted Answer

A)  developing domestic exports 
B)  reducing quotas on foreign goods 
C)  a more active monetary policy 
D)  the free movement of resources 
E)  imposing trade restrictions 
A)  developing domestic exports 
B)  reducing quotas on foreign goods 
C)  a more active monetary policy 
D)  the free movement of resources 
E)  imposing trade restrictions

Question 13

A tariff imposed on foreign imports will cause _____.

Accepted Answer

A)  demand for imports to increase 
B)  domestic prices of imports to rise 
C)  market supply of importable to increase 
D)  import prices to fall 
E)  market supply of domestic goods to decline 
A)  demand for imports to increase 
B)  domestic prices of imports to rise 
C)  market supply of importable to increase 
D)  import prices to fall 
E)  market supply of domestic goods to decline

Question 14

Which of the following stands true of corruption?

Accepted Answer

A)  Payment of money or gifts in order to receive a government service or benefit is a widespread practice only in less-developed countries. 
B)  Corruption reduces growth most directly through government investment in projects with high productivity. 
C)  Corrupt governments spend less on capital goods than governments that are less corrupt. 
D)  The more competitive a country's markets are, the fewer the opportunities for corruption. 
E)  Private investment is relatively higher in countries in which government expenditure is very high. 
A)  Payment of money or gifts in order to receive a government service or benefit is a widespread practice only in less-developed countries. 
B)  Corruption reduces growth most directly through government investment in projects with high productivity. 
C)  Corrupt governments spend less on capital goods than governments that are less corrupt. 
D)  The more competitive a country's markets are, the fewer the opportunities for corruption. 
E)  Private investment is relatively higher in countries in which government expenditure is very high.

Question 15

Statistics show that countries with the lowest rates of economic growth have a strong outward-oriented development strategy.

Accepted Answer

A) True 
 B)False

Question 16

What is measured by the ratio of export prices to import prices?

Accepted Answer

A)  The terms of trade 
B)  The productivity ratio 
C)  The trade standards 
D)  The gains from trade 
E)  The balance of trade 
A)  The terms of trade 
B)  The productivity ratio 
C)  The trade standards 
D)  The gains from trade 
E)  The balance of trade

Question 17

The replacement of foreign manufactured goods by domestically manufactured goods is called _____.

Accepted Answer

A)  import swap 
B)  export substitution 
C)  primary production 
D)  import substitution 
E)  trade protectionism 
A)  import swap 
B)  export substitution 
C)  primary production 
D)  import substitution 
E)  trade protectionism

Question 18

Which of the following is the common link among developing countries?

Accepted Answer

A)  High inflation 
B)  Low unemployment 
C)  Low trade deficits 
D)  Minimum government interference 
E)  Low per capita GDP 
A)  High inflation 
B)  Low unemployment 
C)  Low trade deficits 
D)  Minimum government interference 
E)  Low per capita GDP

Question 19

It is generally true that per capita GNP is:

Accepted Answer

A)  negatively correlated with labor productivity. 
B)  positively correlated with the standard of living. 
C)  negatively correlated with the life expectancy rate. 
D)  uncorrelated with the literacy level. 
E)  positively correlated with the rate of population growth. 
A)  negatively correlated with labor productivity. 
B)  positively correlated with the standard of living. 
C)  negatively correlated with the life expectancy rate. 
D)  uncorrelated with the literacy level. 
E)  positively correlated with the rate of population growth.

Question 20

Which of the following is an example of a bilateral aid?

Accepted Answer

A)  A U.S. commercial bank loan to a Mexican investor 
B)  The establishment of a Brazilian subsidiary by a German firm 
C)  U.S. humanitarian aid to Somalia 
D)  A trade credit extended to Morocco for the purchase of Iranian oil 
E)  A World Bank loan to Kenya 
A)  A U.S. commercial bank loan to a Mexican investor 
B)  The establishment of a Brazilian subsidiary by a German firm 
C)  U.S. humanitarian aid to Somalia 
D)  A trade credit extended to Morocco for the purchase of Iranian oil 
E)  A World Bank loan to Kenya

Exam 17: Development Economics

Quotas are designed to:

No government that receives foreign aid sells products to its people.

An inward-oriented strategy is designed to:

Which of the following is a basic human need?

In many less-developed countries, per capita GDP falls even though real GDP rises, because:

Which of the following limit the direct creation of new jobs through foreign investment?

Capital shallowing occurs because old capital depreciates, or becomes completely obsolete with the passage of time.

Mexico and India have a fairly large number of engineers and technical personnel, which means that new technology can be adapted relatively quickly.

The Taiwanese government allows tax credits for domestic producers who compete with manufacturers in First World nations. This suggests that Taiwan engages in _____.

In absolute terms, poverty is measured as:

Import quotas are aimed at increasing the quality of domestic products.

The existence of dual economies supports the argument for _____.

A tariff imposed on foreign imports will cause _____.

Which of the following stands true of corruption?

Statistics show that countries with the lowest rates of economic growth have a strong outward-oriented development strategy.

What is measured by the ratio of export prices to import prices?

The replacement of foreign manufactured goods by domestically manufactured goods is called _____.

Which of the following is the common link among developing countries?

It is generally true that per capita GNP is:

Which of the following is an example of a bilateral aid?

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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