Question 1

Explain the role of economic freedom in economic development.

Accepted Answer

Economic freedom is a measurement of the

Question 2

The significance of dead capital is that

Accepted Answer

A)  it is difficult to allocate to its most efficient use. 
B)  its fixed cost is too high. 
C)  it is being removed from its most efficient use. 
D)  it replaces too many workers. 
A)  it is difficult to allocate to its most efficient use. 
B)  its fixed cost is too high. 
C)  it is being removed from its most efficient use. 
D)  it replaces too many workers.

Question 3

The International Monetary Fund (IMF) was created to achieve each of the following goals EXCEPT

Accepted Answer

A)  to supervise exchange-rate practices of member countries. 
B)  to help finance economic development in poor countries. 
C)  to encourage convertibility of member countries' currencies. 
D)  to lend funds to countries having difficulties meeting their international payment obligations. 
A)  to supervise exchange-rate practices of member countries. 
B)  to help finance economic development in poor countries. 
C)  to encourage convertibility of member countries' currencies. 
D)  to lend funds to countries having difficulties meeting their international payment obligations.

Question 4

What is the mission of the International Monetary Fund (IMF)?

Accepted Answer

The IMF was established after World War

Question 5

Suppose that the real Gross Domestic Product (GDP) growth rate for a country was 4 percent and the population growth rate was 7 percent. What would the per capital real Gross Domestic Product (GDP) growth rate be for this country?

Accepted Answer

A)  -3 percent 
B)  -4 percent 
C)  3 percent 
D)  4 percent 
A)  -3 percent 
B)  -4 percent 
C)  3 percent 
D)  4 percent

Question 6

The adverse selection problem in international investment means

Accepted Answer

A)  that those seeking funds for the riskiest projects are those most actively seeking the funds. 
B)  that the recipients of the funds may use the funds for other than the approved projects. 
C)  that government officials may demand higher than the usual amount of bribes. 
D)  those in the highest levels of government are the most dishonest. 
A)  that those seeking funds for the riskiest projects are those most actively seeking the funds. 
B)  that the recipients of the funds may use the funds for other than the approved projects. 
C)  that government officials may demand higher than the usual amount of bribes. 
D)  those in the highest levels of government are the most dishonest.

Question 7

Foreign direct investment is

Accepted Answer

A)  the purchase of less than 10 percent of the shares of ownership in a company in another country. 
B)  the acquisition of more than 10 percent of the shares of ownership in a company in another country. 
C)  the diversification of purchasing shares in many companies in one country so that risk is kept to a minimum. 
D)  the diversification of purchasing shares in many companies in different countries so that risk is kept to a minimum. 
A)  the purchase of less than 10 percent of the shares of ownership in a company in another country. 
B)  the acquisition of more than 10 percent of the shares of ownership in a company in another country. 
C)  the diversification of purchasing shares in many companies in one country so that risk is kept to a minimum. 
D)  the diversification of purchasing shares in many companies in different countries so that risk is kept to a minimum.

Question 8

The rate of growth in real GDP minus the rate of growth of the population is the

Accepted Answer

A)  rate of growth of nominal GDP. 
B)  unemployment rate. 
C)  population growth rate. 
D)  rate of growth of per capita real GDP. 
A)  rate of growth of nominal GDP. 
B)  unemployment rate. 
C)  population growth rate. 
D)  rate of growth of per capita real GDP.

Question 9

To be a member of the Internal Monetary Fund a nation must deposit funds based on

Accepted Answer

A)  its national income. 
B)  the amount of funds it wants to deposit. 
C)  the need to loan money to developing nations. 
D)  rules set up by the World Bank. 
A)  its national income. 
B)  the amount of funds it wants to deposit. 
C)  the need to loan money to developing nations. 
D)  rules set up by the World Bank.

Question 10

The term "economic freedom" means

Accepted Answer

A)  the right to own private property. 
B)  the right to trade goods and services. 
C)  the right to own financial assets. 
D)  all the above. 
A)  the right to own private property. 
B)  the right to trade goods and services. 
C)  the right to own financial assets. 
D)  all the above.

Question 11

If high level of corruption in a country deters foreign investment in worthy projects, this is known as

Accepted Answer

A)  portfolio investment. 
B)  moral hazard. 
C)  foreign direct investment. 
D)  adverse selection. 
A)  portfolio investment. 
B)  moral hazard. 
C)  foreign direct investment. 
D)  adverse selection.

Question 12

The largest International Monetary Fund quota subscription, denominated in Special Drawing Rights, is held by

Accepted Answer

A)  the United States. 
B)  Japan. 
C)  China. 
D)  Russia. 
A)  the United States. 
B)  Japan. 
C)  China. 
D)  Russia.

Question 13

What are the sources of private investments in foreign nations?

Accepted Answer

The three sources of private investment

Question 14

An international organization formed with the aim of promoting world economic growth through financial stability is called

Accepted Answer

A)  the World Bank. 
B)  the International Development Association. 
C)  the International Finance Corporation. 
D)  the International Monetary Fund (IMF). 
A)  the World Bank. 
B)  the International Development Association. 
C)  the International Finance Corporation. 
D)  the International Monetary Fund (IMF).

Question 15

Why are international investors who have invested in developing nations favoring foreign direct investment and portfolio investment over loans?

Accepted Answer

A)  The process of making loans is usually more difficult for investors to do than foreign direct and portfolio investment. 
B)  The interest rate charged on the loans is usually lower than what can be earned in the U.S. 
C)  It is illegal for banks to make loans to foreign firms. 
D)  Investors have an aversion to owning dead capital and want to make sure that the resources they own do not become dead capital. 
A)  The process of making loans is usually more difficult for investors to do than foreign direct and portfolio investment. 
B)  The interest rate charged on the loans is usually lower than what can be earned in the U.S. 
C)  It is illegal for banks to make loans to foreign firms. 
D)  Investors have an aversion to owning dead capital and want to make sure that the resources they own do not become dead capital.

Question 16

The World Bank is

Accepted Answer

A)  composed of five separate institutions. 
B)  the central bank of the U.S. government. 
C)  the official name of the International Monetary Fund. 
D)  the central bank of the United Nations. 
A)  composed of five separate institutions. 
B)  the central bank of the U.S. government. 
C)  the official name of the International Monetary Fund. 
D)  the central bank of the United Nations.

Question 17

The purchase of less than 10 percent of the shares of ownership in a company in another country is known as

Accepted Answer

A)  a hostile takeover. 
B)  an ineffective method for encouraging economic growth. 
C)  foreign direct investment. 
D)  portfolio investment. 
A)  a hostile takeover. 
B)  an ineffective method for encouraging economic growth. 
C)  foreign direct investment. 
D)  portfolio investment.

Question 18

The International Monetary Fund (IMF) is an international organization designed to

Accepted Answer

A)  promote world economic growth by means of greater financial stability. 
B)  promote world economic growth via loans to developed nations. 
C)  circulate a single currency worldwide. 
D)  act as the world's central bank. 
A)  promote world economic growth by means of greater financial stability. 
B)  promote world economic growth via loans to developed nations. 
C)  circulate a single currency worldwide. 
D)  act as the world's central bank.

Question 19

Which of the following equations is correct?

Accepted Answer

A)  Rate of growth of per capita real GDP = rate of growth in real GDP - rate of growth of population 
B)  Rate of growth of per capita real GDP = rate of growth in real GDP + rate of growth of population 
C)  Rate of growth in real GDP = rate of growth of per capita real GDP - rate of growth of population 
D)  Rate of growth in real GDP = rate of growth of per capita real GDP + rate of growth of population 
A)  Rate of growth of per capita real GDP = rate of growth in real GDP - rate of growth of population 
B)  Rate of growth of per capita real GDP = rate of growth in real GDP + rate of growth of population 
C)  Rate of growth in real GDP = rate of growth of per capita real GDP - rate of growth of population 
D)  Rate of growth in real GDP = rate of growth of per capita real GDP + rate of growth of population

Question 20

Which of the following is a barrier to economic growth in many developing nations?

Accepted Answer

A)  the shortage of labor 
B)  the lack of natural resources 
C)  the lack of economic freedom 
D)  the low level of restrictions in the labor market 
A)  the shortage of labor 
B)  the lack of natural resources 
C)  the lack of economic freedom 
D)  the low level of restrictions in the labor market

Exam 18: Policies and Prospects for Global Economic Growth

Explain the role of economic freedom in economic development.

The significance of dead capital is that

The International Monetary Fund (IMF) was created to achieve each of the following goals EXCEPT

What is the mission of the International Monetary Fund (IMF)?

Suppose that the real Gross Domestic Product (GDP) growth rate for a country was 4 percent and the population growth rate was 7 percent. What would the per capital real Gross Domestic Product (GDP) growth rate be for this country?

The adverse selection problem in international investment means

Foreign direct investment is

The rate of growth in real GDP minus the rate of growth of the population is the

To be a member of the Internal Monetary Fund a nation must deposit funds based on

The term "economic freedom" means

If high level of corruption in a country deters foreign investment in worthy projects, this is known as

The largest International Monetary Fund quota subscription, denominated in Special Drawing Rights, is held by

What are the sources of private investments in foreign nations?

An international organization formed with the aim of promoting world economic growth through financial stability is called

Why are international investors who have invested in developing nations favoring foreign direct investment and portfolio investment over loans?

The World Bank is

The purchase of less than 10 percent of the shares of ownership in a company in another country is known as

The International Monetary Fund (IMF) is an international organization designed to

Which of the following equations is correct?

Which of the following is a barrier to economic growth in many developing nations?

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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