Question 1

Generally, there is a strong positive correlation between per capita GNP and other measures of human development.

Accepted Answer

A) True 
 B)False

Question 2

While using an outward-oriented development strategy, the government in Taiwan did not make any attempt to stimulate exports.

Accepted Answer

A) True 
 B)False

Question 3

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 an 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 an increase in actual output level.

Question 4

In absolute terms, poverty is measured as:

Accepted Answer

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

Question 5

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 6

A quality-of-life index measures absolute poverty levels.

Accepted Answer

A) True 
 B)False

Question 7

Because of the absolutism concept of poverty, a poor family in the United States will fall within the same category as a poor family in Cuba.

Accepted Answer

A) True 
 B)False

Question 8

The reason why public subsidization of industries in less-developed countries causes slow economic growth is that:

Accepted Answer

A)  when companies face no competition, there is no incentive for them to improve their production. 
B)  too much of the taxpayer's money is spent in these programs. 
C)  consumers tend to develop an aversion for the purchase of subsidized goods and services. 
D)  subsidies tend to create too much competition for products. 
E)  subsidization creates shortage in the product market. 
A)  when companies face no competition, there is no incentive for them to improve their production. 
B)  too much of the taxpayer's money is spent in these programs. 
C)  consumers tend to develop an aversion for the purchase of subsidized goods and services. 
D)  subsidies tend to create too much competition for products. 
E)  subsidization creates shortage in the product market.

Question 9

Rapid population growth leads to age dependency which refers to:

Accepted Answer

A)  a reduction in the amount of capital per worker, which lowers the productivity of labor. 
B)  shifts in government expenditures from the country's infrastructure to education and health care. 
C)  a large number of dependent children whose consumption requirements lower the ability of the economy to save. 
D)  high mortality rates of middle-aged workers that reduces the average amount of investment spending. 
E)  survival of the elderly who are dependent on government welfare support. 
A)  a reduction in the amount of capital per worker, which lowers the productivity of labor. 
B)  shifts in government expenditures from the country's infrastructure to education and health care. 
C)  a large number of dependent children whose consumption requirements lower the ability of the economy to save. 
D)  high mortality rates of middle-aged workers that reduces the average amount of investment spending. 
E)  survival of the elderly who are dependent on government welfare support.

Question 10

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

Question 11

Which of the following is an example of the First World?

Accepted Answer

A)  The West European countries 
B)  The Middle East countries 
C)  The South Asian countries 
D)  The African countries 
E)  The Latin American countries 
A)  The West European countries 
B)  The Middle East countries 
C)  The South Asian countries 
D)  The African countries 
E)  The Latin American countries

Question 12

Which of the following is a primary product?

Accepted Answer

A)  Tomato sauce 
B)  Chocolate bars 
C)  Salt 
D)  Breakfast cereal 
E)  A desk 
A)  Tomato sauce 
B)  Chocolate bars 
C)  Salt 
D)  Breakfast cereal 
E)  A desk

Question 13

Corruption reduces growth most directly because governments invest in projects with low productivity.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following holds true if a country is said to have a comparative advantage in the production of wheat?

Accepted Answer

A)  The country can produce more wheat than any other nation. 
B)  The opportunity cost of producing wheat is the lowest in the country. 
C)  The price of wheat is the lowest in that country. 
D)  Domestic wheat is of the best quality in the world. 
E)  The country can produce only wheat. 
A)  The country can produce more wheat than any other nation. 
B)  The opportunity cost of producing wheat is the lowest in the country. 
C)  The price of wheat is the lowest in that country. 
D)  Domestic wheat is of the best quality in the world. 
E)  The country can produce only wheat.

Question 15

Assume that initially country A exchanges three barrels of oil for one ton of steel from country B. Later the arrangement changes to four barrels of oil for one ton of steel. This indicates that:

Accepted Answer

A)  the terms of trade for country B have improved. 
B)  country A has a comparative advantage in the production of steel. 
C)  the relative price of steel in terms of oil has fallen. 
D)  the terms of trade for country A have improved. 
E)  country B has an absolute advantage in the production of oil. 
A)  the terms of trade for country B have improved. 
B)  country A has a comparative advantage in the production of steel. 
C)  the relative price of steel in terms of oil has fallen. 
D)  the terms of trade for country A have improved. 
E)  country B has an absolute advantage in the production of oil.

Question 16

A product in the first stage of production is defined as a(n):

Accepted Answer

A)  basic need. 
B)  investment. 
C)  environmental product. 
D)  primary product. 
E)  transitory product. 
A)  basic need. 
B)  investment. 
C)  environmental product. 
D)  primary product. 
E)  transitory product.

Question 17

Import substitution is the only strategy used by developing countries to develop their manufacturing industries.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a recommended strategy to increase productivity of the private sector?

Accepted Answer

A)  A reduction in government subsidies to producers 
B)  An increase in business taxes 
C)  An increase in government investment in risky projects 
D)  An increase in the money supply 
E)  An increase in subsidy on goods and services 
A)  A reduction in government subsidies to producers 
B)  An increase in business taxes 
C)  An increase in government investment in risky projects 
D)  An increase in the money supply 
E)  An increase in subsidy on goods and services

Question 19

Which of the following is not a probable consequence of food aid to developing countries?

Accepted Answer

A)  Increased domestic food prices 
B)  Declining domestic output 
C)  Misallocation of food supplies 
D)  Increased dependency on foreign food supplies 
E)  Increased starvation of the needy 
A)  Increased domestic food prices 
B)  Declining domestic output 
C)  Misallocation of food supplies 
D)  Increased dependency on foreign food supplies 
E)  Increased starvation of the needy

Question 20

An inward-oriented strategy is designed to:

Accepted Answer

A)  expand a country's export capacity. 
B)  lower the production of capital goods. 
C)  develop the domestic manufacturing sector. 
D)  promote the consumption of imported goods. 
E)  improve productivity in the domestic service sector. 
A)  expand a country's export capacity. 
B)  lower the production of capital goods. 
C)  develop the domestic manufacturing sector. 
D)  promote the consumption of imported goods. 
E)  improve productivity in the domestic service sector.

Exam 17: Development Economics

Generally, there is a strong positive correlation between per capita GNP and other measures of human development.

While using an outward-oriented development strategy, the government in Taiwan did not make any attempt to stimulate exports.

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

In absolute terms, poverty is measured as:

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

A quality-of-life index measures absolute poverty levels.

Because of the absolutism concept of poverty, a poor family in the United States will fall within the same category as a poor family in Cuba.

The reason why public subsidization of industries in less-developed countries causes slow economic growth is that:

Rapid population growth leads to age dependency which refers to:

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

Which of the following is an example of the First World?

Which of the following is a primary product?

Corruption reduces growth most directly because governments invest in projects with low productivity.

Which of the following holds true if a country is said to have a comparative advantage in the production of wheat?

Assume that initially country A exchanges three barrels of oil for one ton of steel from country B. Later the arrangement changes to four barrels of oil for one ton of steel. This indicates that:

A product in the first stage of production is defined as a(n):

Import substitution is the only strategy used by developing countries to develop their manufacturing industries.

Which of the following is a recommended strategy to increase productivity of the private sector?

Which of the following is not a probable consequence of food aid to developing countries?

An inward-oriented strategy is designed to:

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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