Question 1

Which of the following provides the best explanation of why low-income countries generally remain poor?

Accepted Answer

A)  Their political environment and policies often discourage productive activity and reduce the potential gains from specialization and exchange. 
B)  They are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates. 
C)  They are poorly endowed with natural resources, which are essential for long-term rapid growth. 
D)  When the average income level is low, workers have little incentive to earn higher incomes. 
A)  Their political environment and policies often discourage productive activity and reduce the potential gains from specialization and exchange. 
B)  They are oppressed by developed nations that benefit from the cheap goods available from countries with low wage rates. 
C)  They are poorly endowed with natural resources, which are essential for long-term rapid growth. 
D)  When the average income level is low, workers have little incentive to earn higher incomes. A

Question 2

Economic growth is

Accepted Answer

A)  cannot be illustrated by the shift of a production possibilities curve, while economic development can. 
B)  includes improvements in the quality of life, while economic development considers only GDP per capita. 
C)  defined qualitatively, while economic development is more quantitative in nature. 
D)  defined quantitatively, while economic development is more qualitative in nature. 
A)  cannot be illustrated by the shift of a production possibilities curve, while economic development can. 
B)  includes improvements in the quality of life, while economic development considers only GDP per capita. 
C)  defined qualitatively, while economic development is more quantitative in nature. 
D)  defined quantitatively, while economic development is more qualitative in nature. D

Question 3

"Countries are poor because they cannot afford to save and invest" is called the:

Accepted Answer

A)  vicious circle of poverty. 
B)  savings-investment trap. 
C)  LDC trap. 
D)  cycle of insufficient credit. 
A)  vicious circle of poverty. 
B)  savings-investment trap. 
C)  LDC trap. 
D)  cycle of insufficient credit. A

Question 4

Which of the following represents a problem with using per capita GDP to compare standard of living between less-developed and industrially advanced countries?

Accepted Answer

A)  G DP per capita does not take into account differences in population between countries. 
B)  GDP is particularly difficult to measure in industrially advanced countries because a much larger percentage of economic activity occurs outside of officially measured market activity than in less-developed countries. 
C)  GDP per capita will overstate the prevailing standard of living for the average person in countries with extreme levels of income inequality. 
D)  GDP per capita and other quality of life measures are not correlated. 
A)  G DP per capita does not take into account differences in population between countries. 
B)  GDP is particularly difficult to measure in industrially advanced countries because a much larger percentage of economic activity occurs outside of officially measured market activity than in less-developed countries. 
C)  GDP per capita will overstate the prevailing standard of living for the average person in countries with extreme levels of income inequality. 
D)  GDP per capita and other quality of life measures are not correlated.

Question 5

Suppose an LDC is producing on its production possibilities frontier such that it produces a subsistence level of consumption goods and enough capital goods just to replace the existing capital that depreciates. Foreign investment can lead to economic growth for this LDC in which of the following ways?

Accepted Answer

A)  The LDC uses the investment to control inflation. 
B)  The mere presence of more money in the economy will lead to economic growth. 
C)  The LDC invests in consumption goods to move beyond the subsistence level this year. 
D)  The LDC invests in additional capital such that the rate of capital formation exceeds the value of capital depreciated. 
A)  The LDC uses the investment to control inflation. 
B)  The mere presence of more money in the economy will lead to economic growth. 
C)  The LDC invests in consumption goods to move beyond the subsistence level this year. 
D)  The LDC invests in additional capital such that the rate of capital formation exceeds the value of capital depreciated.

Question 6

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 7

The nation of Exland is considered a less-developed country and has the following characteristics. Which one is not typical of a less-developed country?

Accepted Answer

A)  high illiteracy 
B)  high unemployment 
C)  rapid growth of technology 
D)  rapid population growth 
A)  high illiteracy 
B)  high unemployment 
C)  rapid growth of technology 
D)  rapid population growth

Question 8

Which of the following statements about real GDP per capita is correct?

Accepted Answer

A)  Real GDP per capita is inversely related to quality of life measures such as productivity and life expectancy. 
B)  Real GDP per capita is more accurately recorded in IACs than in LDCs. 
C)  Countries with higher real GDP per capita have lower per capita energy consumption. 
D)  Real GDP per capita in the United States is about seven times larger than in Ethiopia. 
A)  Real GDP per capita is inversely related to quality of life measures such as productivity and life expectancy. 
B)  Real GDP per capita is more accurately recorded in IACs than in LDCs. 
C)  Countries with higher real GDP per capita have lower per capita energy consumption. 
D)  Real GDP per capita in the United States is about seven times larger than in Ethiopia.

Question 9

What role does population growth play in economic development?

Accepted Answer

Rapid population growth creates a high d

Question 10

Which of the following statements is the best critique of the use of GDP per capita to compare welfare between nations?

Accepted Answer

A)  GDP per capita is commonly used as a measure of welfare so it must be a valid measure. 
B)  GDP per capita is independent of the country's currency so it is not subject to change due to variations in exchange rates. 
C)  GDP per capita is calculated in a consistent and reliable way so it is not subject to measurement errors. 
D)  GDP per capita is highly correlated with alternative measures of quality of life . 
A)  GDP per capita is commonly used as a measure of welfare so it must be a valid measure. 
B)  GDP per capita is independent of the country's currency so it is not subject to change due to variations in exchange rates. 
C)  GDP per capita is calculated in a consistent and reliable way so it is not subject to measurement errors. 
D)  GDP per capita is highly correlated with alternative measures of quality of life .

Question 11

Describe in general terms four or five characteristics of less-developed countries.

Accepted Answer

Less-developed countries have high popul

Question 12

The "Four Tigers" of East Asia are the newly industrialized countries of Taiwan, South Korea, Hong Kong, and:

Accepted Answer

A)  Japan. 
B)  Singapore. 
C)  the Philippines. 
D)  Vietnam. 
A)  Japan. 
B)  Singapore. 
C)  the Philippines. 
D)  Vietnam.

Question 13

Which of the following is not evidence of the lower standard of living among less-developed countries?

Accepted Answer

A)  high per capita real GDP 
B)  high percentage of households headed by females 
C)  high infant mortality rate 
D)  low life expectancy 
A)  high per capita real GDP 
B)  high percentage of households headed by females 
C)  high infant mortality rate 
D)  low life expectancy

Question 14

To grow and prosper, less-developed countries must not :

Accepted Answer

A)  invest in human capital. 
B)  build a strong infrastructure. 
C)  shift resources out of the production of consumer goods and into the production of capital goods. 
D)  shift resources out of the production of capital goods and into the production of consumer goods 
A)  invest in human capital. 
B)  build a strong infrastructure. 
C)  shift resources out of the production of consumer goods and into the production of capital goods. 
D)  shift resources out of the production of capital goods and into the production of consumer goods

Question 15

Which of the following is not a common characteristic of IACs?

Accepted Answer

A)  market-based economies 
B)  large stocks of technologically advanced capital 
C)  well-educated labor 
D)  low per capita energy consumption 
A)  market-based economies 
B)  large stocks of technologically advanced capital 
C)  well-educated labor 
D)  low per capita energy consumption

Question 16

Which of the following is not a way for IACs to help LDCs achieve economic growth?

Accepted Answer

A)  private investment 
B)  aid 
C)  loans 
D)  intervention in politics 
A)  private investment 
B)  aid 
C)  loans 
D)  intervention in politics

Question 17

Suppose real GDP in a country called Gambria is increasing by 5% annually and the population of Gambria is increasing by 2% annually. Then, :

Accepted Answer

A)  Gambria's population must be declining. 
B)  Gambria will have to export more than it imports. 
C)  the general level of prices in Gambria must be increasing. 
D)  Gambria's per capita real GDP will be increasing. 
A)  Gambria's population must be declining. 
B)  Gambria will have to export more than it imports. 
C)  the general level of prices in Gambria must be increasing. 
D)  Gambria's per capita real GDP will be increasing.

Question 18

The poorest regions in the world, as measured by GDP per capita, are:

Accepted Answer

A)  Latin America and the Caribbean. 
B)  the Middle East and North Africa. 
C)  Sub-Saharan Africa and South Asia. 
D)  Australia and New Zealand. 
A)  Latin America and the Caribbean. 
B)  the Middle East and North Africa. 
C)  Sub-Saharan Africa and South Asia. 
D)  Australia and New Zealand.

Question 19

Explain why the LDCs are unable to invest much in capital goods and human capital.

Accepted Answer

The demands of the growing populations i

Question 20

Which of the following makes long-term low-interest loans to LDCs?

Accepted Answer

A)  Agency for International Development (AI
D)  
B)  World Bank 
C)  International Monetary Fund (IMF) 
D)  New International Economic Order (NIEO) 
A)  Agency for International Development (AI
D)  
B)  World Bank 
C)  International Monetary Fund (IMF) 
D)  New International Economic Order (NIEO)

Exam 30: Growth and the Less Developed Countries

Which of the following provides the best explanation of why low-income countries generally remain poor?

Economic growth is

"Countries are poor because they cannot afford to save and invest" is called the:

Which of the following represents a problem with using per capita GDP to compare standard of living between less-developed and industrially advanced countries?

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

The nation of Exland is considered a less-developed country and has the following characteristics. Which one is not typical of a less-developed country?

Which of the following statements about real GDP per capita is correct?

What role does population growth play in economic development?

Which of the following statements is the best critique of the use of GDP per capita to compare welfare between nations?

Describe in general terms four or five characteristics of less-developed countries.

The "Four Tigers" of East Asia are the newly industrialized countries of Taiwan, South Korea, Hong Kong, and:

Which of the following is not evidence of the lower standard of living among less-developed countries?

To grow and prosper, less-developed countries must not :

Which of the following is not a common characteristic of IACs?

Which of the following is not a way for IACs to help LDCs achieve economic growth?

Suppose real GDP in a country called Gambria is increasing by 5% annually and the population of Gambria is increasing by 2% annually. Then, :

The poorest regions in the world, as measured by GDP per capita, are:

Explain why the LDCs are unable to invest much in capital goods and human capital.

Which of the following makes long-term low-interest loans to LDCs?

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

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

Understanding Direct and Inverse Relationships between Variables

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