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.

Question 2

There is a significant positive relationship between ____ and ____.

Accepted Answer

A)  natural resource commodity exports, high levels of per capita GDP 
B)  investment in capital, high levels of per capita GDP 
C)  high levels of illiteracy, high levels of per capita GDP 
D)  limited government recognition of land tenure and property ownership, high levels of per capita GDP 
A)  natural resource commodity exports, high levels of per capita GDP 
B)  investment in capital, high levels of per capita GDP 
C)  high levels of illiteracy, high levels of per capita GDP 
D)  limited government recognition of land tenure and property ownership, high levels of per capita GDP

Question 3

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

Question 4

Which of the following statements is true?

Accepted Answer

A)  A less developed country (LD
C)  is a country with a low GDP per capita, low levels of capital, and uneducated workers. 
B)  The vicious circle of poverty exists because GDP must rise before people can save and invest. 
C)  LDCs are characterized by rapid population growth and low levels of investment in human capital. 
D)  All of the above. 
A)  A less developed country (LD
C)  is a country with a low GDP per capita, low levels of capital, and uneducated workers. 
B)  The vicious circle of poverty exists because GDP must rise before people can save and invest. 
C)  LDCs are characterized by rapid population growth and low levels of investment in human capital. 
D)  All of the above.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The vicious circle of poverty is the trap in which the LDC is too poor to save and therefore it cannot invest and remains poor.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  They do not produce many goods and services. 
B)  Labor productivity is low. 
C)  Investment funds tend to flow abroad 
D)  Investment in human capital is very low. 
E)  The labor force is too small. 
A)  They do not produce many goods and services. 
B)  Labor productivity is low. 
C)  Investment funds tend to flow abroad 
D)  Investment in human capital is very low. 
E)  The labor force is too small.

Question 8

Which of the following is not generally considered to be an ingredient for economic growth?

Accepted Answer

A)  Investment in human capital. 
B)  Political instability. 
C)  High savings rate and investment in capital. 
D)  Growth in technology. 
E)  Investment in infrastructure. 
A)  Investment in human capital. 
B)  Political instability. 
C)  High savings rate and investment in capital. 
D)  Growth in technology. 
E)  Investment in infrastructure.

Question 9

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).

Question 10

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 11

GDP per capita is about 10 times higher in industrially advanced countries (IACs)than in the poorer less-developed countries (LDCs).

Accepted Answer

A) True 
 B)False

Question 12

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. 
E)  The vicious circle of poverty argument states that poverty precludes capital investment and that no capital investment perpetuates poverty. 
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. 
E)  The vicious circle of poverty argument states that poverty precludes capital investment and that no capital investment perpetuates poverty.

Question 13

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 14

Which of the following is not a problem for less-developed countries?

Accepted Answer

A)  Poor health and nutrition. 
B)  Shortages of labor. 
C)  High unemployment rates. 
D)  Low labor productivity. 
E)  low life expectancy 
A)  Poor health and nutrition. 
B)  Shortages of labor. 
C)  High unemployment rates. 
D)  Low labor productivity. 
E)  low life expectancy

Question 15

Political instability is a deterrent to long-term private investment.

Accepted Answer

A) True 
 B)False

Question 16

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.

Exam 23: Growth and the Less-Developed Countries

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

There is a significant positive relationship between ____ and ____.

Compared to IACs,LDCs are often characterized by:

Which of the following statements is true?

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

The vicious circle of poverty is the trap in which the LDC is too poor to save and therefore it cannot invest and remains poor.

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

Which of the following is not generally considered to be an ingredient for economic growth?

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

Which of the following does not hinder economic development?

GDP per capita is about 10 times higher in industrially advanced countries (IACs)than in the poorer less-developed countries (LDCs).

Which of the following statements draws a false conclusion?

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 not a problem for less-developed countries?

Political instability is a deterrent to long-term private investment.

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

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

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

International Trade and Finance

Economies in Transition

Filters

There is a significant positive relationship between and .