Question 1

International investors are more likely to invest in countries

Accepted Answer

A)  where it is relatively easier to establish property rights to capital goods. 
B)  where there is a significant amount of dead capital. 
C)  which have a high amount of government inefficiency. 
D)  where there are barriers to the ownership of capital goods. 
A)  where it is relatively easier to establish property rights to capital goods. 
B)  where there is a significant amount of dead capital. 
C)  which have a high amount of government inefficiency. 
D)  where there are barriers to the ownership of capital goods.

Question 2

A nation's account with the IMF is called its

Accepted Answer

A)  deposit surplus. 
B)  current account. 
C)  quota subscription. 
D)  capital account. 
A)  deposit surplus. 
B)  current account. 
C)  quota subscription. 
D)  capital account.

Question 3

Which of the following statements about the International Monetary Fund (IMF) is TRUE?

Accepted Answer

A)  The IMF was created to finance long-term economic development projects in poor countries. 
B)  The IMF was created to reduce tariff barriers between nations. 
C)  The IMF functions as a central bank that conducts monetary policy for the world economy. 
D)  The IMF obtains funds from quota subscriptions charged to member countries. 
A)  The IMF was created to finance long-term economic development projects in poor countries. 
B)  The IMF was created to reduce tariff barriers between nations. 
C)  The IMF functions as a central bank that conducts monetary policy for the world economy. 
D)  The IMF obtains funds from quota subscriptions charged to member countries.

Question 4

The World Bank specializes in making loans to

Accepted Answer

A)  industrialized nations. 
B)  communist nations. 
C)  developing nations. 
D)  African nations. 
A)  industrialized nations. 
B)  communist nations. 
C)  developing nations. 
D)  African nations.

Question 5

When government inefficiencies exist and government officials can be bribed, then

Accepted Answer

A)  dead capital will not exist. 
B)  the country will have positive economic growth. 
C)  a bribe will increase the cost of investing in capital. 
D)  property rights will be more secure since an official has been bribed to grant ownership to the business. 
A)  dead capital will not exist. 
B)  the country will have positive economic growth. 
C)  a bribe will increase the cost of investing in capital. 
D)  property rights will be more secure since an official has been bribed to grant ownership to the business.

Question 6

The problem of dead capital can be eliminated by

Accepted Answer

A)  changing the structure of import tariffs. 
B)  increasing the labor force participation rate. 
C)  making it easier for people to establish legal ownership of productive capital. 
D)  restricting population growth. 
A)  changing the structure of import tariffs. 
B)  increasing the labor force participation rate. 
C)  making it easier for people to establish legal ownership of productive capital. 
D)  restricting population growth.

Question 7

Economic freedom is

Accepted Answer

A)  important in leading to positive economic growth. 
B)  not an important factor in leading to positive economic growth. 
C)  a confusing concept since the more economic freedom residents in a country have the lower the level of economic growth. 
D)  a concept in theory since no country has pure economic freedom and therefore cannot be analyzed with respect to economic growth. 
A)  important in leading to positive economic growth. 
B)  not an important factor in leading to positive economic growth. 
C)  a confusing concept since the more economic freedom residents in a country have the lower the level of economic growth. 
D)  a concept in theory since no country has pure economic freedom and therefore cannot be analyzed with respect to economic growth.

Question 8

According to the text, the 17 countries with high degrees of economic freedom

Accepted Answer

A)  account for 81 percent of total world output. 
B)  account for less than 25 percent of total world output. 
C)  have the weakest economies. 
D)  have low productivity. 
A)  account for 81 percent of total world output. 
B)  account for less than 25 percent of total world output. 
C)  have the weakest economies. 
D)  have low productivity.

Question 9

Countries with a high level of bureaucratic inefficiency tend to have low rates of real GDP growth because

Accepted Answer

A)  of complications that keep capital goods from flowing to their most efficient use. 
B)  of poor accounting practices when determining real GDP. 
C)  of poor management skill development in companies. 
D)  they facilitate capital goods development. 
A)  of complications that keep capital goods from flowing to their most efficient use. 
B)  of poor accounting practices when determining real GDP. 
C)  of poor management skill development in companies. 
D)  they facilitate capital goods development.

Question 10

If you invest in a foreign company by buying 8 percent of its shares of stock, you have engaged in

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 11

After the financial crisis in the 1990s many economists criticized the IMF and the World Bank. Some suggestions for reform are to

Accepted Answer

A)  create a board of directors made up of finance ministers for the IMF. 
B)  eliminate both the institutions. 
C)  increase private-sector lending by governments providing tax breaks to lenders. 
D)  all of the above 
A)  create a board of directors made up of finance ministers for the IMF. 
B)  eliminate both the institutions. 
C)  increase private-sector lending by governments providing tax breaks to lenders. 
D)  all of the above

Question 12

Which of the following statements is true about the success of the World Bank?

Accepted Answer

A)  The World Bank has been very successful in promoting economic growth because loans have been primarily made to countries that have trouble attracting private funds. 
B)  The World Bank has not been successful because many loans have been made to countries that can attract private funds. 
C)  The World Bank has been successful because it has focused on its primary function of making loans to governments. 
D)  The World Bank has not been successful because it has focused on making loans to governments where there has been a loss of confidence in a nation's financial system. 
A)  The World Bank has been very successful in promoting economic growth because loans have been primarily made to countries that have trouble attracting private funds. 
B)  The World Bank has not been successful because many loans have been made to countries that can attract private funds. 
C)  The World Bank has been successful because it has focused on its primary function of making loans to governments. 
D)  The World Bank has not been successful because it has focused on making loans to governments where there has been a loss of confidence in a nation's financial system.

Question 13

A quota subscription is

Accepted Answer

A)  the maximum amount of funds that can be drawn at the World Bank without a formal proposal. 
B)  the maximum amount that a private investor can invest in foreign firms. 
C)  a nation's account at the International Monetary Fund. 
D)  when an investor sets limits on the proportion of their portfolio that will contain foreign investments. 
A)  the maximum amount of funds that can be drawn at the World Bank without a formal proposal. 
B)  the maximum amount that a private investor can invest in foreign firms. 
C)  a nation's account at the International Monetary Fund. 
D)  when an investor sets limits on the proportion of their portfolio that will contain foreign investments.

Question 14

The rapid withdrawal of foreign investment funds from a nation creates

Accepted Answer

A)  an international financial crisis. 
B)  an international funding crisis. 
C)  an international fiscal crisis. 
D)  an international fiduciary crisis. 
A)  an international financial crisis. 
B)  an international funding crisis. 
C)  an international fiscal crisis. 
D)  an international fiduciary crisis.

Question 15

The multinational agency that specializes in making loans to developing nations in an effort to promote long-term development and growth is the

Accepted Answer

A)  International Monetary Fund. 
B)  World Trade Organization. 
C)  United Nations Development Program. 
D)  World Bank. 
A)  International Monetary Fund. 
B)  World Trade Organization. 
C)  United Nations Development Program. 
D)  World Bank.

Question 16

Name the two international institutions that have been formed to attain higher rates of global economic growth and briefly discuss what each of the agencies does.

Accepted Answer

There are two agencies, the World Bank a

Question 17

One of the most significant barriers to economic growth in the world's poorest nations is

Accepted Answer

A)  environmental issues. 
B)  political freedom. 
C)  dead capital. 
D)  U.S. government interference. 
A)  environmental issues. 
B)  political freedom. 
C)  dead capital. 
D)  U.S. government interference.

Question 18

Approximately what percentage of the World Bank's loans go to developing nations in the East Asia/Pacific and South Asia regions combined?

Accepted Answer

A)  10% 
B)  40% 
C)  70% 
D)  100% 
A)  10% 
B)  40% 
C)  70% 
D)  100%

Question 19

The following are impediments to economic growth EXCEPT

Accepted Answer

A)  dead capital. 
B)  increased education. 
C)  lack of economic freedom. 
D)  bureaucratic inefficiency. 
A)  dead capital. 
B)  increased education. 
C)  lack of economic freedom. 
D)  bureaucratic inefficiency.

Question 20

Which of the following statements is true?

Accepted Answer

A)  All nations that belong to the International Monetary Fund have equal voting power. 
B)  The voting power of a nation in the International Monetary Fund is determined by its quota subscription. 
C)  The voting power of a nation in the International Monetary Fund is called special drawing rights. 
D)  The voting procedure in the International Fund is determined by the World Bank. 
A)  All nations that belong to the International Monetary Fund have equal voting power. 
B)  The voting power of a nation in the International Monetary Fund is determined by its quota subscription. 
C)  The voting power of a nation in the International Monetary Fund is called special drawing rights. 
D)  The voting procedure in the International Fund is determined by the World Bank.

Exam 18: Policies and Prospects for Global Economic Growth

International investors are more likely to invest in countries

A nation's account with the IMF is called its

Which of the following statements about the International Monetary Fund (IMF) is TRUE?

The World Bank specializes in making loans to

When government inefficiencies exist and government officials can be bribed, then

The problem of dead capital can be eliminated by

Economic freedom is

According to the text, the 17 countries with high degrees of economic freedom

Countries with a high level of bureaucratic inefficiency tend to have low rates of real GDP growth because

If you invest in a foreign company by buying 8 percent of its shares of stock, you have engaged in

After the financial crisis in the 1990s many economists criticized the IMF and the World Bank. Some suggestions for reform are to

Which of the following statements is true about the success of the World Bank?

A quota subscription is

The rapid withdrawal of foreign investment funds from a nation creates

The multinational agency that specializes in making loans to developing nations in an effort to promote long-term development and growth is the

Name the two international institutions that have been formed to attain higher rates of global economic growth and briefly discuss what each of the agencies does.

One of the most significant barriers to economic growth in the world's poorest nations is

Approximately what percentage of the World Bank's loans go to developing nations in the East Asia/Pacific and South Asia regions combined?

The following are impediments to economic growth EXCEPT

Which of the following statements is true?

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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