Question 1

A highly active role by government may be needed to promote economic growth in low-income DVCs because of

Accepted Answer

A)  a lack of infrastructure. 
B)  rigid law enforcement in the country. 
C)  excessive local entrepreneurship. 
D)  all these reasons. 
A)  a lack of infrastructure. 
B)  rigid law enforcement in the country. 
C)  excessive local entrepreneurship. 
D)  all these reasons.

Question 2

The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.

Accepted Answer

A) True 
 B)False

Question 3

Because families can afford to have more children, population growth is greater in the IACs than in the DVCs.

Accepted Answer

A) True 
 B)False

Question 4

The World Bank

Accepted Answer

A)  is also known as the International Monetary Fund (IMF). 
B)  lends money to developing nations for basic infrastructure projects such as dams, irrigation, health and sanitation, communications, and transportation. 
C)  is an affiliate of the World Trade Organization (WTO). 
D)  provides subsidies to private firms so they can improve their wages and working conditions. 
A)  is also known as the International Monetary Fund (IMF). 
B)  lends money to developing nations for basic infrastructure projects such as dams, irrigation, health and sanitation, communications, and transportation. 
C)  is an affiliate of the World Trade Organization (WTO). 
D)  provides subsidies to private firms so they can improve their wages and working conditions.

Question 5

An increasing share of the private capital flows to DVCs in recent years has been in the form of

Accepted Answer

A)  interest-free government loans. 
B)  educational and training assistance. 
C)  direct foreign investment. 
D)  bank loans. 
A)  interest-free government loans. 
B)  educational and training assistance. 
C)  direct foreign investment. 
D)  bank loans.

Question 6

Economists would most likely suggest that advanced nations can best assist in the economic development of developing nations by

Accepted Answer

A)  increasing the amount of military aid to strengthen the government's role in providing law and order. 
B)  increasing trade barriers so that less-developed nations will become more self-sufficient. 
C)  reducing trade barriers and increasing the amount of private and public capital. 
D)  decreasing the amounts of private capital or foreign aid to reduce the level of neocolonialism. 
A)  increasing the amount of military aid to strengthen the government's role in providing law and order. 
B)  increasing trade barriers so that less-developed nations will become more self-sufficient. 
C)  reducing trade barriers and increasing the amount of private and public capital. 
D)  decreasing the amounts of private capital or foreign aid to reduce the level of neocolonialism.

Question 7

Capital flight from DVCs (developing countries) tends to offset much of the foreign loans and aid that they receive from IACs (industrially advanced countries).

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not part of a nation's infrastructure?

Accepted Answer

A)  communications facilities 
B)  roads, highways, and bridges 
C)  the electrical power system 
D)  industrial plants and equipment 
A)  communications facilities 
B)  roads, highways, and bridges 
C)  the electrical power system 
D)  industrial plants and equipment

Question 9

The role of government in fostering economic growth in DVCs has been criticized because

Accepted Answer

A)  most governments operate as dictatorships. 
B)  there is often poor administration and corruption in government. 
C)  government is generally supportive of business at the expense of labor. 
D)  governments have adopted the unpopular method of forced savings to stimulate investment. 
A)  most governments operate as dictatorships. 
B)  there is often poor administration and corruption in government. 
C)  government is generally supportive of business at the expense of labor. 
D)  governments have adopted the unpopular method of forced savings to stimulate investment.

Question 10

A reason for placing special emphasis on capital accumulation in developing countries is the high

Accepted Answer

A)  level of adult illiteracy. 
B)  productivity of workers in DVCs. 
C)  marginal benefits of capital goods. 
D)  level of import quotas and tariffs. 
A)  level of adult illiteracy. 
B)  productivity of workers in DVCs. 
C)  marginal benefits of capital goods. 
D)  level of import quotas and tariffs.

Question 11

Which of the following factors contributes most to the high per capita incomes in developed nations?

Accepted Answer

A)  high rates of population growth 
B)  high rates of economic growth 
C)  low rates of investment 
D)  low rates of saving 
A)  high rates of population growth 
B)  high rates of economic growth 
C)  low rates of investment 
D)  low rates of saving

Question 12

Suppose that surplus labor in a Pakistani village is used to build a medical clinic and dig several wells. This is an illustration of

Accepted Answer

A)  foreign aid. 
B)  capital-saving investment. 
C)  in-kind investment. 
D)  technological advance. 
A)  foreign aid. 
B)  capital-saving investment. 
C)  in-kind investment. 
D)  technological advance.

Question 13

The World Bank is the organization to which DVCs turn as a "last-resort" lending agency for projects that private institutions will not fund.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would be an example of direct foreign investment in DVCs?

Accepted Answer

A)  a grant from the World Bank to build an irrigation project in Kenya 
B)  the financing of a new chemical plant in Peru by a German company 
C)  a low-interest loan from the U.S. government to Turkey to purchase military hardware 
D)  a loan from the Japanese government to the Indonesian government to pay for electronic equipment 
A)  a grant from the World Bank to build an irrigation project in Kenya 
B)  the financing of a new chemical plant in Peru by a German company 
C)  a low-interest loan from the U.S. government to Turkey to purchase military hardware 
D)  a loan from the Japanese government to the Indonesian government to pay for electronic equipment

Question 15

Over the next 15 years, roughly what percentage of the increase in world population will come from DVCs?

Accepted Answer

A)  25 percent 
B)  50 percent 
C)  70 percent 
D)  90 percent 
A)  25 percent 
B)  50 percent 
C)  70 percent 
D)  90 percent

Question 16

Which of the following is a factor limiting saving in DVCs?

Accepted Answer

A)  the lack of foreign aid and loans from the World Bank 
B)  Governments control the banking system and set low interest rates. 
C)  the flight of private savings to investments in IACs, where there is less risk 
D)  Those who do save make their savings available only to their families, who use it for consumption. 
A)  the lack of foreign aid and loans from the World Bank 
B)  Governments control the banking system and set low interest rates. 
C)  the flight of private savings to investments in IACs, where there is less risk 
D)  Those who do save make their savings available only to their families, who use it for consumption.

Question 17

The demographic transition concept suggests that

Accepted Answer

A)  effective birth control is the primary prerequisite of DVC income growth. 
B)  income growth must first occur before DVC birth rates will decline. 
C)  children are economic assets in the IACs but economic liabilities in the DVCs. 
D)  the IACs will have higher birth rates than the DVCs. 
A)  effective birth control is the primary prerequisite of DVC income growth. 
B)  income growth must first occur before DVC birth rates will decline. 
C)  children are economic assets in the IACs but economic liabilities in the DVCs. 
D)  the IACs will have higher birth rates than the DVCs.

Question 18

Which of the following is characteristic of DVCs?

Accepted Answer

A)  A large percentage of the labor force is in agriculture. 
B)  There are high levels of saving and investment. 
C)  They have high labor productivity. 
D)  There are high levels of training. 
A)  A large percentage of the labor force is in agriculture. 
B)  There are high levels of saving and investment. 
C)  They have high labor productivity. 
D)  There are high levels of training.

Question 19

To be classified as a low-income developing country, annual per capita income in 2014 needed to be

Accepted Answer

A)  $1,045 or less. 
B)  $628 or less. 
C)  $2,018 or less. 
D)  $925 or less. 
A)  $1,045 or less. 
B)  $628 or less. 
C)  $2,018 or less. 
D)  $925 or less.

Question 20

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Accepted Answer

A) True 
 B)False

Exam 28: The Economics of Developing Countries

A highly active role by government may be needed to promote economic growth in low-income DVCs because of

The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.

Because families can afford to have more children, population growth is greater in the IACs than in the DVCs.

The World Bank

An increasing share of the private capital flows to DVCs in recent years has been in the form of

Economists would most likely suggest that advanced nations can best assist in the economic development of developing nations by

Capital flight from DVCs (developing countries) tends to offset much of the foreign loans and aid that they receive from IACs (industrially advanced countries).

Which of the following is not part of a nation's infrastructure?

The role of government in fostering economic growth in DVCs has been criticized because

A reason for placing special emphasis on capital accumulation in developing countries is the high

Which of the following factors contributes most to the high per capita incomes in developed nations?

Suppose that surplus labor in a Pakistani village is used to build a medical clinic and dig several wells. This is an illustration of

The World Bank is the organization to which DVCs turn as a "last-resort" lending agency for projects that private institutions will not fund.

Which of the following would be an example of direct foreign investment in DVCs?

Over the next 15 years, roughly what percentage of the increase in world population will come from DVCs?

Which of the following is a factor limiting saving in DVCs?

The demographic transition concept suggests that

Which of the following is characteristic of DVCs?

To be classified as a low-income developing country, annual per capita income in 2014 needed to be

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

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