Question 1

Which of the following is considered a political obstacle to economic growth?

Accepted Answer

A)  Few government subsidies 
B)  Low foreign investment 
C)  Lack of entrepreneurial talent 
D)  Explosive population growth 
E)  Insecure property rights 
A)  Few government subsidies 
B)  Low foreign investment 
C)  Lack of entrepreneurial talent 
D)  Explosive population growth 
E)  Insecure property rights

Question 2

If rapid population growth reduces the amount of capital per worker, thereby lowering labor productivity, it is referred to as:

Accepted Answer

A)  age dependency. 
B)  capital budgeting. 
C)  investment diversion. 
D)  capital disinvestment. 
E)  capital shallowing. 
A)  age dependency. 
B)  capital budgeting. 
C)  investment diversion. 
D)  capital disinvestment. 
E)  capital shallowing.

Question 3

The deteriorating-terms-of-trade-argument is based on an assumption that the value of ____ will fall over time.

Accepted Answer

A)  labor inputs 
B)  capital inputs 
C)  technology 
D)  manufactured goods 
E)  primary products 
A)  labor inputs 
B)  capital inputs 
C)  technology 
D)  manufactured goods 
E)  primary products

Question 4

Proponents of inward-oriented policies ignore the fact that natural resources are exhaustible, so their long-run market value will fall.

Accepted Answer

A) True 
 B)False

Question 5

Poverty is usually defined by economists in relative terms.

Accepted Answer

A) True 
 B)False

Question 6

A dual economy is characterized by:

Accepted Answer

A)  rapid productivity growth in both the agricultural sector and the manufacturing sector. 
B)  uneven development trends in two economic sectors. 
C)  drastic differences in regional work ethics. 
D)  the nonexistence of the government and foreign trade sectors. 
E)  a manufacturing sector that does not depend on natural resource supplies for production. 
A)  rapid productivity growth in both the agricultural sector and the manufacturing sector. 
B)  uneven development trends in two economic sectors. 
C)  drastic differences in regional work ethics. 
D)  the nonexistence of the government and foreign trade sectors. 
E)  a manufacturing sector that does not depend on natural resource supplies for production.

Question 7

Quotas are designed to:

Accepted Answer

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

Question 8

Which of the following is a reason for the slow economic growth in former colonial nations?

Accepted Answer

A)  Inadequate foreign aid 
B)  A communist system of government 
C)  Lack of skilled officials 
D)  Religious extremism 
E)  High entrepreneurial skills 
A)  Inadequate foreign aid 
B)  A communist system of government 
C)  Lack of skilled officials 
D)  Religious extremism 
E)  High entrepreneurial skills

Question 9

A key reason for low foreign direct investment in developing nations is:

Accepted Answer

A)  the presence of tariff and non tariff barriers on imports. 
B)  the fear of exploitation of domestic resources by foreign owners. 
C)  the lack of government-operated enterprises. 
D)  the high interest rate charged on loans. 
E)  the fear of falling inflation rates. 
A)  the presence of tariff and non tariff barriers on imports. 
B)  the fear of exploitation of domestic resources by foreign owners. 
C)  the lack of government-operated enterprises. 
D)  the high interest rate charged on loans. 
E)  the fear of falling inflation rates.

Question 10

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 11

A tariff imposed on foreign imports will cause _____.

Accepted Answer

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

Question 12

Foreign direct investment includes portfolio investment.

Accepted Answer

A) True 
 B)False

Question 13

What is the main reason for the failure of import-substitution strategies to generate rapid economic growth?

Accepted Answer

A)  Deteriorating terms of trade 
B)  Scarce natural resources 
C)  Inefficient allocation of resources 
D)  Lack of self-interested behavior by entrepreneurs 
E)  Insufficient subsidies to domestic producers 
A)  Deteriorating terms of trade 
B)  Scarce natural resources 
C)  Inefficient allocation of resources 
D)  Lack of self-interested behavior by entrepreneurs 
E)  Insufficient subsidies to domestic producers

Question 14

South Korea used an inward-oriented development strategy to focus on the growth of exports.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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 17

Which of the following is likely to be a benefit of foreign investment in a developing country?

Accepted Answer

A)  Domestic firms are subjected to foreign competition 
B)  Labor-intensive industries grow quickly 
C)  New technology is adapted 
D)  The natural rate of unemployment falls to zero 
E)  The rate of inflation declines 
A)  Domestic firms are subjected to foreign competition 
B)  Labor-intensive industries grow quickly 
C)  New technology is adapted 
D)  The natural rate of unemployment falls to zero 
E)  The rate of inflation declines

Question 18

Less-developed countries are experiencing rapid population growth because _____.

Accepted Answer

A)  birthrates are rising at a slower rate than mortality rates 
B)  birthrates are falling while mortality rates are rising 
C)  both birthrates and mortality rates are falling 
D)  birthrates are rising while mortality rates are falling 
E)  birthrates are constant and mortality rates are rising 
A)  birthrates are rising at a slower rate than mortality rates 
B)  birthrates are falling while mortality rates are rising 
C)  both birthrates and mortality rates are falling 
D)  birthrates are rising while mortality rates are falling 
E)  birthrates are constant and mortality rates are rising

Question 19

Which of the following statements about the Third World is true?

Accepted Answer

A)  Except for Latin America, most Third World citizens live in urban areas. 
B)  The culture, politics, and geography of the Third World countries are very similar. 
C)  Third World economies are largely dependent on manufacturing industries. 
D)  The Third World is made up of non-communist developing countries. 
E)  About 80 percent of the population of the Third World countries live in China and India. 
A)  Except for Latin America, most Third World citizens live in urban areas. 
B)  The culture, politics, and geography of the Third World countries are very similar. 
C)  Third World economies are largely dependent on manufacturing industries. 
D)  The Third World is made up of non-communist developing countries. 
E)  About 80 percent of the population of the Third World countries live in China and India.

Question 20

What is a trade credit?

Accepted Answer

A)  A credit card purchase 
B)  A government loan for exporters 
C)  The extension of a period of time before which an importer must pay for goods and services purchased 
D)  An IMF loan to meet trade deficit and liabilities for hard currencies 
E)  The time it takes for franchisees to pay for the products they obtain from the main franchiser 
A)  A credit card purchase 
B)  A government loan for exporters 
C)  The extension of a period of time before which an importer must pay for goods and services purchased 
D)  An IMF loan to meet trade deficit and liabilities for hard currencies 
E)  The time it takes for franchisees to pay for the products they obtain from the main franchiser

Exam 17: Development Economics

Which of the following is considered a political obstacle to economic growth?

If rapid population growth reduces the amount of capital per worker, thereby lowering labor productivity, it is referred to as:

The deteriorating-terms-of-trade-argument is based on an assumption that the value of ____ will fall over time.

Proponents of inward-oriented policies ignore the fact that natural resources are exhaustible, so their long-run market value will fall.

Poverty is usually defined by economists in relative terms.

A dual economy is characterized by:

Quotas are designed to:

Which of the following is a reason for the slow economic growth in former colonial nations?

A key reason for low foreign direct investment in developing nations is:

Which of the following is a basic human need?

A tariff imposed on foreign imports will cause _____.

Foreign direct investment includes portfolio investment.

What is the main reason for the failure of import-substitution strategies to generate rapid economic growth?

South Korea used an inward-oriented development strategy to focus on the growth of exports.

Which of the following stands true of corruption?

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

Which of the following is likely to be a benefit of foreign investment in a developing country?

Less-developed countries are experiencing rapid population growth because _____.

Which of the following statements about the Third World is true?

What is a trade credit?

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange 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

Exchapterange Rates and Financial Links Between Countries

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