Question 1

Examples of low-income developing countries are

Accepted Answer

A)  Switzerland, New Zealand, and Australia. 
B)  Germany, Austria, and Italy. 
C)  Chad, Bangladesh, and Ethiopia. 
D)  Mexico, South Korea, and Brazil. 
A)  Switzerland, New Zealand, and Australia. 
B)  Germany, Austria, and Italy. 
C)  Chad, Bangladesh, and Ethiopia. 
D)  Mexico, South Korea, and Brazil.

Question 2

An IAC (industrially advanced country) had a per capita income of $28,200, while a DVC (developing country) had a per capita income of $1,200 in a given year. If both countries experience a per-capita-income growth of 2 percent, then their respective per-capita-income levels one year later will become

Accepted Answer

A)  $33,840 and $1,440. 
B)  $28,764 and $1,224. 
C)  $33,840 and $1,224. 
D)  $28,764 and $1,440. 
A)  $33,840 and $1,440. 
B)  $28,764 and $1,224. 
C)  $33,840 and $1,224. 
D)  $28,764 and $1,440.

Question 3

The "vicious circle of poverty" for developing nations can best be described by

Accepted Answer

A)  low levels of international trade that reduce exports and increase the dependence on imports. 
B)  low incomes that inhibit saving and the accumulation of real and human capital, making it difficult to increase productivity and income. 
C)  a large government sector, which reduces the availability of private investment spending but increases macroeconomic stability. 
D)  a lack of entrepreneurial talent that limits the formation of businesses and the development of private businesses. 
A)  low levels of international trade that reduce exports and increase the dependence on imports. 
B)  low incomes that inhibit saving and the accumulation of real and human capital, making it difficult to increase productivity and income. 
C)  a large government sector, which reduces the availability of private investment spending but increases macroeconomic stability. 
D)  a lack of entrepreneurial talent that limits the formation of businesses and the development of private businesses.

Question 4

In recent years, the governments of the IACs have

Accepted Answer

A)  forgiven a portion of the debt owed by some low-income DVCs. 
B)  substantially reduced foreign aid to the DVCs. 
C)  substantially reduced their contributions to the World Bank. 
D)  discouraged skilled DVC workers from emigrating to the IACs. 
A)  forgiven a portion of the debt owed by some low-income DVCs. 
B)  substantially reduced foreign aid to the DVCs. 
C)  substantially reduced their contributions to the World Bank. 
D)  discouraged skilled DVC workers from emigrating to the IACs.

Question 5

Which of the following is not an example of a sociocultural impediment to economic growth?

Accepted Answer

A)  tribal allegiances that take precedence over national unity 
B)  religious beliefs and practices that severely limit economic activity 
C)  migration of labor resources from agricultural to urban areas 
D)  a system for allocating jobs based on caste or tradition 
A)  tribal allegiances that take precedence over national unity 
B)  religious beliefs and practices that severely limit economic activity 
C)  migration of labor resources from agricultural to urban areas 
D)  a system for allocating jobs based on caste or tradition

Question 6

One common measure of the "standard of living" in a nation is

Accepted Answer

A)  per capita real income. 
B)  unemployment rate. 
C)  real GDP. 
D)  population size. 
A)  per capita real income. 
B)  unemployment rate. 
C)  real GDP. 
D)  population size.

Question 7

Most nations of the world are now IACs, not middle- and low-income DVCs.

Accepted Answer

A) True 
 B)False

Question 8

If the real outputs per capita of a rich nation and a poor nation grow at the same percentage rate, the absolute income gap between the two nations will shrink.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following nations is not considered an industrially advanced country?

Accepted Answer

A)  Russia 
B)  Japan 
C)  Canada 
D)  Australia 
A)  Russia 
B)  Japan 
C)  Canada 
D)  Australia

Question 10

Which of the following factors contributes to the weak economic growth in DVCs?

Accepted Answer

A)  an increase in labor productivity in DVCs 
B)  a decrease in international debts of DVCs 
C)  an increase in the rate of saving in a DVC 
D)  a decrease in the prices of DVC natural resources 
A)  an increase in labor productivity in DVCs 
B)  a decrease in international debts of DVCs 
C)  an increase in the rate of saving in a DVC 
D)  a decrease in the prices of DVC natural resources

Question 11

An example of direct foreign investment is

Accepted Answer

A)  a U.S. bank granting a loan to a Guatemalan firm. 
B)  General Motors building an auto production facility in China. 
C)  a U.S. government foreign aid grant to Bangladesh. 
D)  the purchase of debt issued by the Panamanian government. 
A)  a U.S. bank granting a loan to a Guatemalan firm. 
B)  General Motors building an auto production facility in China. 
C)  a U.S. government foreign aid grant to Bangladesh. 
D)  the purchase of debt issued by the Panamanian government.

Question 12

An advantage of direct foreign investment (compared to foreign loans) is that management skill and technological knowledge often accompany such capital flows.

Accepted Answer

A) True 
 B)False

Question 13

Assume that the real output of a developing nation increases from $120 billion to $140 billion, while its population expands from 100 to 110 million. As a result, real income per capita has increased by about

Accepted Answer

A)  $56 per person. 
B)  $64 per person. 
C)  $72 per person. 
D)  $88 per person. 
A)  $56 per person. 
B)  $64 per person. 
C)  $72 per person. 
D)  $88 per person.

Question 14

Capital flight refers to

Accepted Answer

A)  the tendency of large corporations of IACs to build new plants in the DVCs because labor is cheaper. 
B)  DVC citizens accumulating or investing their savings in the IACs. 
C)  the high international mobility of speculative funds caused by variations in exchange rates. 
D)  the tendency of DVCs to overinvest in commercial aircraft. 
A)  the tendency of large corporations of IACs to build new plants in the DVCs because labor is cheaper. 
B)  DVC citizens accumulating or investing their savings in the IACs. 
C)  the high international mobility of speculative funds caused by variations in exchange rates. 
D)  the tendency of DVCs to overinvest in commercial aircraft.

Question 15

The population growth rate of the DVCs (developing countries) as a group in recent decades has been

Accepted Answer

A)  steady. 
B)  declining. 
C)  rising modestly. 
D)  rising rapidly. 
A)  steady. 
B)  declining. 
C)  rising modestly. 
D)  rising rapidly.

Question 16

Which of the following countries had the best score in the Corruption Perception Index in 2015?

Accepted Answer

A)  Japan 
B)  China 
C)  United States 
D)  Canada 
A)  Japan 
B)  China 
C)  United States 
D)  Canada

Question 17

Which of the following DVC policies is not likely to increase DVC economic growth?

Accepted Answer

A)  privatizing state industries 
B)  controlling population growth 
C)  restricting direct foreign investment from abroad 
D)  building human capital 
A)  privatizing state industries 
B)  controlling population growth 
C)  restricting direct foreign investment from abroad 
D)  building human capital

Question 18

The "brain drain" problem in the DVCs refers to the fact that the best-educated workers

Accepted Answer

A)  are concentrated in the public, rather than the private, sector. 
B)  are concentrated in the private, rather than the public, sector. 
C)  are concentrated in urban, rather than rural, areas. 
D)  have emigrated from the DVCs to the IACs. 
A)  are concentrated in the public, rather than the private, sector. 
B)  are concentrated in the private, rather than the public, sector. 
C)  are concentrated in urban, rather than rural, areas. 
D)  have emigrated from the DVCs to the IACs.

Question 19

The vast majority of the labor forces of the low-income DVCs are engaged in agriculture.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following IACs (industrially advanced countries) was the leading provider of development assistance to DVCs (developing countries) in 2015, in terms of absolute dollar amounts?

Accepted Answer

A)  United States 
B)  Japan 
C)  Canada 
D)  Germany 
A)  United States 
B)  Japan 
C)  Canada 
D)  Germany

Exam 28: The Economics of Developing Countries

Examples of low-income developing countries are

The "vicious circle of poverty" for developing nations can best be described by

In recent years, the governments of the IACs have

Which of the following is not an example of a sociocultural impediment to economic growth?

One common measure of the "standard of living" in a nation is

Most nations of the world are now IACs, not middle- and low-income DVCs.

If the real outputs per capita of a rich nation and a poor nation grow at the same percentage rate, the absolute income gap between the two nations will shrink.

Which of the following nations is not considered an industrially advanced country?

Which of the following factors contributes to the weak economic growth in DVCs?

An example of direct foreign investment is

An advantage of direct foreign investment (compared to foreign loans) is that management skill and technological knowledge often accompany such capital flows.

Assume that the real output of a developing nation increases from $120 billion to $140 billion, while its population expands from 100 to 110 million. As a result, real income per capita has increased by about

Capital flight refers to

The population growth rate of the DVCs (developing countries) as a group in recent decades has been

Which of the following countries had the best score in the Corruption Perception Index in 2015?

Which of the following DVC policies is not likely to increase DVC economic growth?

The "brain drain" problem in the DVCs refers to the fact that the best-educated workers

The vast majority of the labor forces of the low-income DVCs are engaged in agriculture.

Which of the following IACs (industrially advanced countries) was the leading provider of development assistance to DVCs (developing countries) in 2015, in terms of absolute dollar amounts?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

Filters