Question 1

Compared to IACs, LDCs are often characterized by:

Accepted Answer

A)  higher life expectancy. 
B)  higher adult literacy rates. 
C)  higher daily calorie supply. 
D)  lower per capita energy consumption. 
A)  higher life expectancy. 
B)  higher adult literacy rates. 
C)  higher daily calorie supply. 
D)  lower per capita energy consumption.

Question 2

If an economy's population grows at 3 percent and real GDP grows at 2 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 growing. 
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 growing.

Question 3

Which of the following is most important if the living standards of people residing in a country are going to improve?

Accepted Answer

A)  growth of population 
B)  growth of per capita GDP 
C)  growth of the money supply 
D)  growth of government expenditures as a share of GDP 
A)  growth of population 
B)  growth of per capita GDP 
C)  growth of the money supply 
D)  growth of government expenditures as a share of GDP

Question 4

Which of the following is infrastructure?

Accepted Answer

A)  IBM computer plant 
B)  training and education 
C)  services of doctors 
D)  airports 
A)  IBM computer plant 
B)  training and education 
C)  services of doctors 
D)  airports

Question 5

Which of the following statements draws a false conclusion?

Accepted Answer

A)  Life expectancy in an average African country is lower than in an average European country; therefore Europeans can expect to outlive Africans. 
B)  Nations that currently produce no capital goods, and whose inhabitants are hungry, risk famine with internally funded capital investments. 
C)  Some African nations have substantially more food and capital investment than others; therefore, their standard of living is higher. 
D)  Population reduction policies, if effective, can improve the nation's wealth by increasing real per capita GDP. 
A)  Life expectancy in an average African country is lower than in an average European country; therefore Europeans can expect to outlive Africans. 
B)  Nations that currently produce no capital goods, and whose inhabitants are hungry, risk famine with internally funded capital investments. 
C)  Some African nations have substantially more food and capital investment than others; therefore, their standard of living is higher. 
D)  Population reduction policies, if effective, can improve the nation's wealth by increasing real per capita GDP.

Question 6

How much of the U.S. federal budget is spent on foreign aid?

Accepted Answer

A)  about 1 percent 
B)  about 5 percent 
C)  about 25 percent 
D)  about 50 percent 
A)  about 1 percent 
B)  about 5 percent 
C)  about 25 percent 
D)  about 50 percent

Question 7

If a country is characterized by low life expectancy, low adult literacy, and low per capita energy consumption, it is likely:

Accepted Answer

A)  an IAC. 
B)  an LDC. 
C)  neither an IAC nor an LDC. 
D)  either an IAC or an LDC. 
A)  an IAC. 
B)  an LDC. 
C)  neither an IAC nor an LDC. 
D)  either an IAC or an LDC.

Question 8

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 9

Which of the following is correct ?

Accepted Answer

A)  Economic development is more quantitative than economic growth. 
B)  A country cannot achieve economic growth with a limited base of natural resources. 
C)  Infrastructure is capital provided by the private sector. 
D)  Economic development in LDCs is low because of many of them lack saving, infrastructure, and a political environment favorable to growth. 
A)  Economic development is more quantitative than economic growth. 
B)  A country cannot achieve economic growth with a limited base of natural resources. 
C)  Infrastructure is capital provided by the private sector. 
D)  Economic development in LDCs is low because of many of them lack saving, infrastructure, and a political environment favorable to growth.

Question 10

Which of the following is in charge of U.S. aid to foreign countries?

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)

Question 11

Domestic law and order, the infrastructure, and the climate of international trade are all aspects of a country's:

Accepted Answer

A)  natural resources endowment. 
B)  human resources investment. 
C)  capital investment. 
D)  political environment. 
A)  natural resources endowment. 
B)  human resources investment. 
C)  capital investment. 
D)  political environment.

Question 12

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

Accepted Answer

A)  World Bank 
B)  Agency for International Development (AI
D)  
C)  Agency for International Finance (AIF) 
D)  International Monetary Fund (IMF) 
A)  World Bank 
B)  Agency for International Development (AI
D)  
C)  Agency for International Finance (AIF) 
D)  International Monetary Fund (IMF)

Question 13

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.

Question 14

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 15

Exhibit 17-1 Nation of Padia
 
Exhibit 17-1 shows the production possibilities curve of the nation of Padia, an LDC. With foreign investment, which of the following changes that was not previously possible would become possible?

Accepted Answer

A)  a move from V to III 
B)  a move from IV to II 
C)  a move from III to a point beyond the production possibilities curve 
D)  a move from III to I 
A)  a move from V to III 
B)  a move from IV to II 
C)  a move from III to a point beyond the production possibilities curve 
D)  a move from III to I

Question 16

Which of the following can be a barrier to an LDC's economic growth and development?

Accepted Answer

A)  low population growth 
B)  a low level of human capital 
C)  faster capital accumulation 
D)  too much infrastructure 
A)  low population growth 
B)  a low level of human capital 
C)  faster capital accumulation 
D)  too much infrastructure

Question 17

An industrially advanced country (IAC) is defined as a country with a GDP per capita among the top ____ countries in the world.

Accepted Answer

A)  10 
B)  27 
C)  39 
D)  50 
A)  10 
B)  27 
C)  39 
D)  50

Question 18

Less-developed countries are poor for all of the following reasons except one. Which one?

Accepted Answer

A)  The labor force is too small. 
B)  Labor productivity is low. 
C)  Investment funds tend to flow abroad 
D)  Investment in human capital is very low. 
A)  The labor force is too small. 
B)  Labor productivity is low. 
C)  Investment funds tend to flow abroad 
D)  Investment in human capital is very low.

Question 19

Which of the following would be most likely to encourage capital formation in a less-developed country?

Accepted Answer

A)  the expectation of sustained high inflation 
B)  the expectation that property rights will be highly secure in the years ahead 
C)  the imposition of high tariffs and other restraints limiting imports 
D)  higher personal and corporate tax rates 
A)  the expectation of sustained high inflation 
B)  the expectation that property rights will be highly secure in the years ahead 
C)  the imposition of high tariffs and other restraints limiting imports 
D)  higher personal and corporate tax rates

Question 20

Which of the following characterizes the IACs?

Accepted Answer

A)  high per capita GDP growth and high population growth 
B)  low per capita GDP growth and low population growth 
C)  low per capital GDP growth and high savings rate 
D)  low human capital investment 
A)  high per capita GDP growth and high population growth 
B)  low per capita GDP growth and low population growth 
C)  low per capital GDP growth and high savings rate 
D)  low human capital investment

Exam 30: Growth and the Less Developed Countries

Compared to IACs, LDCs are often characterized by:

If an economy's population grows at 3 percent and real GDP grows at 2 percent, then:

Which of the following is most important if the living standards of people residing in a country are going to improve?

Which of the following is infrastructure?

Which of the following statements draws a false conclusion?

How much of the U.S. federal budget is spent on foreign aid?

If a country is characterized by low life expectancy, low adult literacy, and low per capita energy consumption, it is likely:

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

Which of the following is correct ?

Which of the following is in charge of U.S. aid to foreign countries?

Domestic law and order, the infrastructure, and the climate of international trade are all aspects of a country's:

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

GDP per capita is a relatively good measurement of:

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

Exhibit 17-1 Nation of Padia Exhibit 17-1 shows the production possibilities curve of the nation of Padia, an LDC. With foreign investment, which of the following changes that was not previously possible would become possible?

Which of the following can be a barrier to an LDC's economic growth and development?

An industrially advanced country (IAC) is defined as a country with a GDP per capita among the top ____ countries in the world.

Less-developed countries are poor for all of the following reasons except one. Which one?

Which of the following would be most likely to encourage capital formation in a less-developed country?

Which of the following characterizes the IACs?

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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