Question 1

The right to private property and ability to exchange goods and services freely is known as

Accepted Answer

A)  political freedom. 
B)  economic freedom. 
C)  constitutional freedom. 
D)  external freedom. 
A)  political freedom. 
B)  economic freedom. 
C)  constitutional freedom. 
D)  external freedom. B

Question 2

Dead capital is

Accepted Answer

A)  a capital resource that lacks a clear title of ownership. 
B)  a capital resource that is obsolete. 
C)  a capital resource that is used to produce non-competitive products. 
D)  a capital resource associated with the defense industry. 
A)  a capital resource that lacks a clear title of ownership. 
B)  a capital resource that is obsolete. 
C)  a capital resource that is used to produce non-competitive products. 
D)  a capital resource associated with the defense industry. A

Question 3

The possibility for recipients of funds in foreign countries to engage in riskier behavior after receiving financing is called

Accepted Answer

A)  inequitable financing. 
B)  moral hazard. 
C)  adverse selection. 
D)  asymmetric information. 
A)  inequitable financing. 
B)  moral hazard. 
C)  adverse selection. 
D)  asymmetric information. B

Question 4

In nondemocratic countries that have experienced consistent economic growth and improvements in their standards of living,

Accepted Answer

A)  there is no tendency to become more democratic over time because the current political situation is economically successful. 
B)  political freedom is apt to decrease over time as governments become more controlling. 
C)  the rise of special-interest groups usually promotes competition and growth. 
D)  there is a tendency to become democratic over time. 
A)  there is no tendency to become more democratic over time because the current political situation is economically successful. 
B)  political freedom is apt to decrease over time as governments become more controlling. 
C)  the rise of special-interest groups usually promotes competition and growth. 
D)  there is a tendency to become democratic over time.

Question 5

When a nation joins the IMF, it deposits funds into an account. These funds have a value based on a weighted average of

Accepted Answer

A)  the euro, the British pound sterling, the Japanese yen, and the U.S. dollar. 
B)  the euro, the British pound sterling, the Chinese yuan, and the U.S. dollar. 
C)  the Russian ruble, the British pound sterling, the Japanese yen, and the U.S. dollar. 
D)  the Russian ruble, the British pound sterling, the Chinese yuan, and the U.S. dollar. 
A)  the euro, the British pound sterling, the Japanese yen, and the U.S. dollar. 
B)  the euro, the British pound sterling, the Chinese yuan, and the U.S. dollar. 
C)  the Russian ruble, the British pound sterling, the Japanese yen, and the U.S. dollar. 
D)  the Russian ruble, the British pound sterling, the Chinese yuan, and the U.S. dollar.

Question 6

Dead capital is

Accepted Answer

A)  unlikely to have any productive use. 
B)  unlikely to be applied to its most efficient use. 
C)  useful only if employed in a labor-intensive production process. 
D)  useful only if employed in a capital-intensive production process. 
A)  unlikely to have any productive use. 
B)  unlikely to be applied to its most efficient use. 
C)  useful only if employed in a labor-intensive production process. 
D)  useful only if employed in a capital-intensive production process.

Question 7

Foreign direct investment implies that the investor obtains more than a ________ share in a foreign company's ownership.

Accepted Answer

A)  30 percent 
B)  40 percent 
C)  50 percent 
D)  none of the above 
A)  30 percent 
B)  40 percent 
C)  50 percent 
D)  none of the above

Question 8

If there is a major problem in a country that leads to the rapid withdrawal of foreign investment, this is known as

Accepted Answer

A)  moral hazard. 
B)  adverse selection crisis. 
C)  portfolio investment crisis. 
D)  international financial crisis. 
A)  moral hazard. 
B)  adverse selection crisis. 
C)  portfolio investment crisis. 
D)  international financial crisis.

Question 9

The tolerance of bribe-taking by government officials

Accepted Answer

A)  reduces economic uncertainty because all investors are aware of the practice. 
B)  reduces economic efficiency because rules governing property rights are not regularly enforced. 
C)  reduces government expenditures because public employees can be paid less. 
D)  reduces the need for government to impose taxes on poor people. 
A)  reduces economic uncertainty because all investors are aware of the practice. 
B)  reduces economic efficiency because rules governing property rights are not regularly enforced. 
C)  reduces government expenditures because public employees can be paid less. 
D)  reduces the need for government to impose taxes on poor people.

Question 10

An example of foreign direct investment is the

Accepted Answer

A)  domestic acquisition of less than 10 percent of a foreign company. 
B)  foreign purchase of more than 10 percent of stock in a domestic company. 
C)  purchase of livestock from abroad. 
D)  sale of insurance in a foreign nation. 
A)  domestic acquisition of less than 10 percent of a foreign company. 
B)  foreign purchase of more than 10 percent of stock in a domestic company. 
C)  purchase of livestock from abroad. 
D)  sale of insurance in a foreign nation.

Question 11

The international organization with the sole goal of promoting global antipoverty efforts is the

Accepted Answer

A)  World Bank. 
B)  International Monetary Fund. 
C)  Board of Governors of the Federal Reserve System. 
D)  GAE. 
A)  World Bank. 
B)  International Monetary Fund. 
C)  Board of Governors of the Federal Reserve System. 
D)  GAE.

Question 12

The International Monetary Fund

Accepted Answer

A)  is a central bank like the Federal Reserve System. 
B)  is the bank that causes international financial crisis when the reserves are too high. 
C)  is a multinational agency that specializes in making loans to promote long-term development and growth in developing countries. 
D)  is a multinational organization that aims to promote world economic growth through more financial stability. 
A)  is a central bank like the Federal Reserve System. 
B)  is the bank that causes international financial crisis when the reserves are too high. 
C)  is a multinational agency that specializes in making loans to promote long-term development and growth in developing countries. 
D)  is a multinational organization that aims to promote world economic growth through more financial stability.

Question 13

Country X has experienced GDP growth of 6 percent and a population growth of 4 percent. What is this country's growth of per capita real GDP?

Accepted Answer

A)  2 percent 
B)  10 percent 
C)  6 percent 
D)  -2 percent 
A)  2 percent 
B)  10 percent 
C)  6 percent 
D)  -2 percent

Question 14

Dead capital is

Accepted Answer

A)  machinery that fails to operate properly. 
B)  machinery that requires constant maintenance. 
C)  any capital resource that lacks clear title of ownership. 
D)  a capital resource that depreciates rapidly. 
A)  machinery that fails to operate properly. 
B)  machinery that requires constant maintenance. 
C)  any capital resource that lacks clear title of ownership. 
D)  a capital resource that depreciates rapidly.

Question 15

To the extent that there are concerns about moral hazard and adverse selection in a country,

Accepted Answer

A)  economic growth will be hindered. 
B)  there will be more portfolio investment. 
C)  there will be more foreign direct investment. 
D)  it will be easier to arrange financing for new development projects. 
A)  economic growth will be hindered. 
B)  there will be more portfolio investment. 
C)  there will be more foreign direct investment. 
D)  it will be easier to arrange financing for new development projects.

Question 16

A multinational organization that aims to promote world economic growth through more financial stability is

Accepted Answer

A)  the World Monetary Fund. 
B)  the International Bank. 
C)  the International Monetary Fund. 
D)  the International Monetary Bank. 
A)  the World Monetary Fund. 
B)  the International Bank. 
C)  the International Monetary Fund. 
D)  the International Monetary Bank.

Question 17

Portfolio investment means the

Accepted Answer

A)  purchase of less than 20 percent of the shares of ownership in a company in another country. 
B)  purchase of less than 50 percent of the shares of ownership in a company in another country. 
C)  purchase of less than 80 percent of the shares of ownership in a company in another country. 
D)  purchase of less than 10 percent of the shares of ownership in a company in another country. 
A)  purchase of less than 20 percent of the shares of ownership in a company in another country. 
B)  purchase of less than 50 percent of the shares of ownership in a company in another country. 
C)  purchase of less than 80 percent of the shares of ownership in a company in another country. 
D)  purchase of less than 10 percent of the shares of ownership in a company in another country.

Question 18

When investment occurs in developing nations

Accepted Answer

A)  investors hope to gain significant returns on their investment and residents gain higher rates of economic growth. 
B)  higher rates of economic growth are usually not achieved. 
C)  significant levels of pollution usually occur. 
D)  government politicians usually benefit from the illegal payments made to secure the investment. 
A)  investors hope to gain significant returns on their investment and residents gain higher rates of economic growth. 
B)  higher rates of economic growth are usually not achieved. 
C)  significant levels of pollution usually occur. 
D)  government politicians usually benefit from the illegal payments made to secure the investment.

Question 19

An international financial crisis can be precipitated when

Accepted Answer

A)  the rate of money supply growth is not the same in all nations. 
B)  many international investors look at the behavior of a few large investors to determine when funds should be withdrawn from a particular country. 
C)  newly-acquired political freedom in a country leads some interest groups to form a coalition limiting competition. 
D)  there is an increase in portfolio investment. 
A)  the rate of money supply growth is not the same in all nations. 
B)  many international investors look at the behavior of a few large investors to determine when funds should be withdrawn from a particular country. 
C)  newly-acquired political freedom in a country leads some interest groups to form a coalition limiting competition. 
D)  there is an increase in portfolio investment.

Question 20

A major contributor to a country's real rate of economic growth is its real GDP growth relative to its

Accepted Answer

A)  inflation. 
B)  unemployment rate. 
C)  money growth. 
D)  none of the above. 
A)  inflation. 
B)  unemployment rate. 
C)  money growth. 
D)  none of the above.

Exam 18: Policies and Prospects for Global Economic Growth

The right to private property and ability to exchange goods and services freely is known as

Dead capital is

The possibility for recipients of funds in foreign countries to engage in riskier behavior after receiving financing is called

In nondemocratic countries that have experienced consistent economic growth and improvements in their standards of living,

When a nation joins the IMF, it deposits funds into an account. These funds have a value based on a weighted average of

Dead capital is

Foreign direct investment implies that the investor obtains more than a ________ share in a foreign company's ownership.

If there is a major problem in a country that leads to the rapid withdrawal of foreign investment, this is known as

The tolerance of bribe-taking by government officials

An example of foreign direct investment is the

The international organization with the sole goal of promoting global antipoverty efforts is the

The International Monetary Fund

Country X has experienced GDP growth of 6 percent and a population growth of 4 percent. What is this country's growth of per capita real GDP?

Dead capital is

To the extent that there are concerns about moral hazard and adverse selection in a country,

A multinational organization that aims to promote world economic growth through more financial stability is

Portfolio investment means the

When investment occurs in developing nations

An international financial crisis can be precipitated when

A major contributor to a country's real rate of economic growth is its real GDP growth relative to its

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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