Question 1

Which of the following statements is true about the relationship between high birthrates and real GDP growth?

Accepted Answer

A)  High birthrates in countries with little economic freedom will lead to higher labor force participation rates that in turn lead to higher growth of real GDP. 
B)  High birthrates reduce per capita incomes, and a lack of economic freedom inhibits real GDP growth. 
C)  There is no relationship between birthrates and real GDP growth. 
D)  The influence that birthrates have on real GDP growth is the same in countries whether or not economic freedom exits. 
A)  High birthrates in countries with little economic freedom will lead to higher labor force participation rates that in turn lead to higher growth of real GDP. 
B)  High birthrates reduce per capita incomes, and a lack of economic freedom inhibits real GDP growth. 
C)  There is no relationship between birthrates and real GDP growth. 
D)  The influence that birthrates have on real GDP growth is the same in countries whether or not economic freedom exits.

Question 2

Economic freedom is

Accepted Answer

A)  the right to vote in an election for a political leader. 
B)  the right to own private property and to exchange goods with minimal government interference. 
C)  the amount of control that the government has in a market. 
D)  present as long as private individuals own businesses. 
A)  the right to vote in an election for a political leader. 
B)  the right to own private property and to exchange goods with minimal government interference. 
C)  the amount of control that the government has in a market. 
D)  present as long as private individuals own businesses.

Question 3

When a foreign company engages in riskier behavior after it has received international investment funds, it 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 4

Developing countries are damaged by dead capital because

Accepted Answer

A)  it replaces too many workers, creating unemployment. 
B)  resulting inefficiencies greatly reduce the rate of return on investment. 
C)  it must be sold as scrap. 
D)  none of the above. 
A)  it replaces too many workers, creating unemployment. 
B)  resulting inefficiencies greatly reduce the rate of return on investment. 
C)  it must be sold as scrap. 
D)  none of the above.

Question 5

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

Accepted Answer

A)  Federal Reserve System. 
B)  World Bank. 
C)  International Monetary Fund. 
D)  International World Fund. 
A)  Federal Reserve System. 
B)  World Bank. 
C)  International Monetary Fund. 
D)  International World Fund.

Question 6

A nation's account with the International Monetary Fund is known as

Accepted Answer

A)  a quota subscription. 
B)  monetary deposits. 
C)  monetary rights. 
D)  international reserves. 
A)  a quota subscription. 
B)  monetary deposits. 
C)  monetary rights. 
D)  international reserves.

Question 7

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

Accepted Answer

A)  net exports. 
B)  net national investment. 
C)  portfolio investment 
D)  none of the above 
A)  net exports. 
B)  net national investment. 
C)  portfolio investment 
D)  none of the above

Question 8

Which of the following world regions has received the largest percentage of lending from the World Bank since 1990?

Accepted Answer

A)  Latin America/Caribbean 
B)  South Asia 
C)  Africa 
D)  Middle east 
A)  Latin America/Caribbean 
B)  South Asia 
C)  Africa 
D)  Middle east

Question 9

All of the following are major factors limiting economic growth in developing countries EXCEPT

Accepted Answer

A)  dead capital. 
B)  deregulation. 
C)  inefficient government regulation. 
D)  corruption. 
A)  dead capital. 
B)  deregulation. 
C)  inefficient government regulation. 
D)  corruption.

Question 10

The inefficiencies associated with dead capital can

Accepted Answer

A)  lead to increased consumption. 
B)  reduce the rate of return on investment. 
C)  increase the amount of investment as businesses look for more technologically advanced capital. 
D)  lead to more economic freedom as firms try to get rid of the inefficient capital. 
A)  lead to increased consumption. 
B)  reduce the rate of return on investment. 
C)  increase the amount of investment as businesses look for more technologically advanced capital. 
D)  lead to more economic freedom as firms try to get rid of the inefficient capital.

Question 11

An international financial crisis is

Accepted Answer

A)  when at least one developing country defaults on its loans. 
B)  when a major bank defaults. 
C)  when a world leader is deposed from office. 
D)  the rapid withdrawal of foreign investments and loans from a nation. 
A)  when at least one developing country defaults on its loans. 
B)  when a major bank defaults. 
C)  when a world leader is deposed from office. 
D)  the rapid withdrawal of foreign investments and loans from a nation.

Question 12

Laws that make it difficult to start a new business lead to a

Accepted Answer

A)  high rate of economic growth. 
B)  low rate of economic growth. 
C)  more political freedom. 
D)  laissez-faire. 
A)  high rate of economic growth. 
B)  low rate of economic growth. 
C)  more political freedom. 
D)  laissez-faire.

Question 13

The World Bank is

Accepted Answer

A)  made up of the central banks of the leading industrial nations of the world. 
B)  made up of five separate institutions. 
C)  the Bank of the United Nations. 
D)  the European Union. 
A)  made up of the central banks of the leading industrial nations of the world. 
B)  made up of five separate institutions. 
C)  the Bank of the United Nations. 
D)  the European Union.

Question 14

Which of the following countries has the largest quota subscription at the IMF?

Accepted Answer

A)  Japan 
B)  Russia 
C)  United States 
D)  India 
A)  Japan 
B)  Russia 
C)  United States 
D)  India

Question 15

Explain the meaning of the term dead capital, and discuss why its existence retards economic growth.

Accepted Answer

Dead capital means a capital resource wi

Question 16

Discuss why the World Bank has been criticized for making loans to nations that can attract private funds.

Accepted Answer

Loans given to nations that ca

Question 17

Two types of asymmetric information that create problems for international investment are

Accepted Answer

A)  adverse hazard and moral selection. 
B)  adverse hazard and moral hazard. 
C)  adverse selection and moral hazard. 
D)  adverse selection and moral selection. 
A)  adverse hazard and moral selection. 
B)  adverse hazard and moral hazard. 
C)  adverse selection and moral hazard. 
D)  adverse selection and moral selection.

Question 18

All the following would be a possible loan that the International Monetary Fund might make EXCEPT

Accepted Answer

A)  a loan to a private firm. 
B)  long-term loans to a nation's government which support growth promoting projects. 
C)  short-term loans to a nation's government. 
D)  long-term loans to countries which are having problems in repaying existing debts. 
A)  a loan to a private firm. 
B)  long-term loans to a nation's government which support growth promoting projects. 
C)  short-term loans to a nation's government. 
D)  long-term loans to countries which are having problems in repaying existing debts.

Question 19

Assume that a country has had a relatively steady growth of aggregate real GDP. A higher population growth tends to

Accepted Answer

A)  reduce the growth of per capita real GDP. 
B)  increase the growth of per capita real GDP. 
C)  increase the level of economic freedom. 
D)  increase the level of dead capital. 
A)  reduce the growth of per capita real GDP. 
B)  increase the growth of per capita real GDP. 
C)  increase the level of economic freedom. 
D)  increase the level of dead capital.

Question 20

Which of the following best represents economic growth?

Accepted Answer

A)  an increase in nominal GDP 
B)  an increase in real GDP 
C)  an increase in the per capita nominal GDP 
D)  an increase in the per capita real GDP 
A)  an increase in nominal GDP 
B)  an increase in real GDP 
C)  an increase in the per capita nominal GDP 
D)  an increase in the per capita real GDP

Exam 18: Policies and Prospects for Global Economic Growth

Which of the following statements is true about the relationship between high birthrates and real GDP growth?

Economic freedom is

When a foreign company engages in riskier behavior after it has received international investment funds, it is known as

Developing countries are damaged by dead capital because

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

A nation's account with the International Monetary Fund is known as

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

Which of the following world regions has received the largest percentage of lending from the World Bank since 1990?

All of the following are major factors limiting economic growth in developing countries EXCEPT

The inefficiencies associated with dead capital can

An international financial crisis is

Laws that make it difficult to start a new business lead to a

The World Bank is

Which of the following countries has the largest quota subscription at the IMF?

Explain the meaning of the term dead capital, and discuss why its existence retards economic growth.

Discuss why the World Bank has been criticized for making loans to nations that can attract private funds.

Two types of asymmetric information that create problems for international investment are

All the following would be a possible loan that the International Monetary Fund might make EXCEPT

Assume that a country has had a relatively steady growth of aggregate real GDP. A higher population growth tends to

Which of the following best represents economic growth?

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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