Question 1

If an economy's population grows at 3 percent and real GDP grows at 3 percent, then:

Accepted Answer

A) per capita real GDP is declining. 
B) the economy's standard of living is increasing. 
C) per capita real GDP is negative. 
D) per capita real GDP is constant. 
E) the economy is experiencing unemployment. 
A) per capita real GDP is declining. 
B) the economy's standard of living is increasing. 
C) per capita real GDP is negative. 
D) per capita real GDP is constant. 
E) the economy is experiencing unemployment.

Question 2

Which of the following is a problem when comparing GDPs per capita between nations?

Accepted Answer

A) GDP per capita fails to measure income distribution. 
B) Fluctuations in exchange rates affect differences in GDP per capita. 
C) GDP per capita is subject to greater measurement errors for LDCs compared to IACs. 
D) All of these. 
A) GDP per capita fails to measure income distribution. 
B) Fluctuations in exchange rates affect differences in GDP per capita. 
C) GDP per capita is subject to greater measurement errors for LDCs compared to IACs. 
D) All of these.

Question 3

Which of the following does not hinder economic development?

Accepted Answer

A) Low birth rates. 
B) Low GDP that limits saving and investment. 
C) Lack of knowledge. 
D) Lack of technology. 
E) Lack of physical capital. 
A) Low birth rates. 
B) Low GDP that limits saving and investment. 
C) Lack of knowledge. 
D) Lack of technology. 
E) Lack of physical capital.

Question 4

What role does population growth play in economic development?

Accepted Answer

Rapid population growth creates a high d

Question 5

Most LDCs face the problems of low population growth and excessive saving.

Accepted Answer

A) True 
 B)False

Question 6

__________ generally results in increases in per-capita GDP.

Accepted Answer

A) Civil war 
B) High levels of inequality in the distribution of land ownership 
C) Investment in human capital 
D) A stock of natural resources 
A) Civil war 
B) High levels of inequality in the distribution of land ownership 
C) Investment in human capital 
D) A stock of natural resources

Question 7

The recent growth records of Japan and Hong Kong during the last 50 years indicate that a nation can grow rapidly without:

Accepted Answer

A) securely defined property rights. 
B) adopting modern technology. 
C) significant capital formation. 
D) abundant domestic natural resources. 
A) securely defined property rights. 
B) adopting modern technology. 
C) significant capital formation. 
D) abundant domestic natural resources.

Question 8

When a nation's political environment is more favorable, it will:

Accepted Answer

A) attract more physical investment. 
B) encourage individuals to invest more heavily in human capital. 
C) encourage the development and efficient use of natural resources. 
D) do all of these. 
A) attract more physical investment. 
B) encourage individuals to invest more heavily in human capital. 
C) encourage the development and efficient use of natural resources. 
D) do all of these.

Question 9

If a country's real GDP is growing at 5 percent and the population is also growing at 5 percent, its:

Accepted Answer

A) per capita real GDP grows at an increasing rate. 
B) per capita real GDP grows at a constant rate. 
C) population growth will eventually exceed real GDP. 
D) per capita real GDP decreases at a constant rate. 
E) per capita real GDP does not change. 
A) per capita real GDP grows at an increasing rate. 
B) per capita real GDP grows at a constant rate. 
C) population growth will eventually exceed real GDP. 
D) per capita real GDP decreases at a constant rate. 
E) per capita real GDP does not change.

Question 10

Real GDP per capita and other alternative measures of the quality of life are:

Accepted Answer

A) independent. 
B) directly correlated. 
C) poorly correlated. 
D) inversely related. 
A) independent. 
B) directly correlated. 
C) poorly correlated. 
D) inversely related.

Question 11

Which of the following helps low-income countries grow rapidly relative to high-income countries?

Accepted Answer

A) Low-income countries are in a better position to save a larger share of their income. 
B) Low-income countries can employ technologies and practices that have been successful in high-income countries. 
C) Low-income countries generally have legal systems that protect property rights and enforce contracts in a more evenhanded manner. 
D) Low-income countries generally have more favorable weather conditions. 
A) Low-income countries are in a better position to save a larger share of their income. 
B) Low-income countries can employ technologies and practices that have been successful in high-income countries. 
C) Low-income countries generally have legal systems that protect property rights and enforce contracts in a more evenhanded manner. 
D) Low-income countries generally have more favorable weather conditions.

Question 12

Which of the following statements is true ?

Accepted Answer

A) There is no single correct strategy for economic growth and development. 
B) In general, GDP per capita is highly correlated with alternative quality of life measures. 
C) The World Bank is affiliated with the United Nations and makes long-term low-interest loans to LDCs. 
D) All of these. 
A) There is no single correct strategy for economic growth and development. 
B) In general, GDP per capita is highly correlated with alternative quality of life measures. 
C) The World Bank is affiliated with the United Nations and makes long-term low-interest loans to LDCs. 
D) All of these.

Question 13

Compared to IACs, LDCs are often characterized by:

Accepted Answer

A) lower life expectancy. 
B) lower adult literacy. 
C) lower per capita energy consumption. 
D) All of these. 
A) lower life expectancy. 
B) lower adult literacy. 
C) lower per capita energy consumption. 
D) All of these.

Question 14

In order for Ethiopia to increase its future economic growth, it must choose a point that is:

Accepted Answer

A) below its production possibilities curve. 
B) further along on its production possibilities curve toward the capital goods axis. 
C) further along on its production possibilities curve toward the consumption goods axis. 
D) further along on its production possibilities curve away from the population axis. 
E) above its production possibilities curve. 
A) below its production possibilities curve. 
B) further along on its production possibilities curve toward the capital goods axis. 
C) further along on its production possibilities curve toward the consumption goods axis. 
D) further along on its production possibilities curve away from the population axis. 
E) above its production possibilities curve.

Question 15

The number of the countries of the world classified as a less developed country (LDC)is about:

Accepted Answer

A) 50. 
B) 75. 
C) 100. 
D) 150. 
E) 300. 
A) 50. 
B) 75. 
C) 100. 
D) 150. 
E) 300.

Question 16

In order to achieve a high economic freedom rating, a country must:

Accepted Answer

A) provide secure protection of privately owned property and evenhanded enforcement of contracts. 
B) refrain from creating barriers that limit domestic and international trade. 
C) rely more fully on markets rather than governments to allocate goods and resources. 
D) do all of these. 
A) provide secure protection of privately owned property and evenhanded enforcement of contracts. 
B) refrain from creating barriers that limit domestic and international trade. 
C) rely more fully on markets rather than governments to allocate goods and resources. 
D) do all of these.

Question 17

Which of the following factors would be most likely to encourage investment and capital formation in a less-developed nation?

Accepted Answer

A) High and variable rates of inflation. 
B) Tariffs and quotas that restrict international trade. 
C) A legal system that provides for secure property rights and evenhanded enforcement of contracts. 
D) High marginal tax rates. 
A) High and variable rates of inflation. 
B) Tariffs and quotas that restrict international trade. 
C) A legal system that provides for secure property rights and evenhanded enforcement of contracts. 
D) High marginal tax rates.

Question 18

Which of the following is most likely to be a major source of growth in per capita GDP?

Accepted Answer

A) A high investment \ GDP ratio 
B) A high rate of inflation 
C) Rapid population growth 
D) Rapid growth in the money supply 
A) A high investment \ GDP ratio 
B) A high rate of inflation 
C) Rapid population growth 
D) Rapid growth in the money supply

Question 19

Economic growth and development in LDCs are low because many of them lack:

Accepted Answer

A) saving. 
B) infrastructure. 
C) a political environment favorable to growth. 
D) All of these. 
A) saving. 
B) infrastructure. 
C) a political environment favorable to growth. 
D) All of these.

Question 20

GDP per capita is a relatively good measurement of:

Accepted Answer

A) the distribution of income. 
B) purchasing power. 
C) household production. 
D) the standard of living. 
A) the distribution of income. 
B) purchasing power. 
C) household production. 
D) the standard of living.

Exam 20: Growth and the Less-Developed Countries

If an economy's population grows at 3 percent and real GDP grows at 3 percent, then:

Which of the following is a problem when comparing GDPs per capita between nations?

Which of the following does not hinder economic development?

What role does population growth play in economic development?

Most LDCs face the problems of low population growth and excessive saving.

__________ generally results in increases in per-capita GDP.

The recent growth records of Japan and Hong Kong during the last 50 years indicate that a nation can grow rapidly without:

When a nation's political environment is more favorable, it will:

If a country's real GDP is growing at 5 percent and the population is also growing at 5 percent, its:

Real GDP per capita and other alternative measures of the quality of life are:

Which of the following helps low-income countries grow rapidly relative to high-income countries?

Which of the following statements is true ?

Compared to IACs, LDCs are often characterized by:

In order for Ethiopia to increase its future economic growth, it must choose a point that is:

The number of the countries of the world classified as a less developed country (LDC)is about:

In order to achieve a high economic freedom rating, a country must:

Which of the following factors would be most likely to encourage investment and capital formation in a less-developed nation?

Which of the following is most likely to be a major source of growth in per capita GDP?

Economic growth and development in LDCs are low because many of them lack:

GDP per capita is a relatively good measurement of:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Filters