Question 1

The vicious circle of poverty is based on the connections between low income, low saving, low investment, and low productivity.

Accepted Answer

A) True 
 B)False

Question 2

A study concludes that in DVCs, rising incomes must first be achieved and only then will there be slower population growth. What view of DVC population growth would this study be supporting?

Accepted Answer

A)  traditional view 
B)  peasant agriculture view 
C)  the will-to-develop view 
D)  demographic transition view 
A)  traditional view 
B)  peasant agriculture view 
C)  the will-to-develop view 
D)  demographic transition view

Question 3

In recent decades,

Accepted Answer

A)  all countries classified as DVCs have had little or no economic growth. 
B)  some nations classified as DVCs have grown rapidly, while others have grown very slowly or not at all. 
C)  all countries classified as DVCs have experienced rapid economic growth and rising living standards. 
D)  all countries classified as low-income DVCs have had declining per capita GDPs. 
A)  all countries classified as DVCs have had little or no economic growth. 
B)  some nations classified as DVCs have grown rapidly, while others have grown very slowly or not at all. 
C)  all countries classified as DVCs have experienced rapid economic growth and rising living standards. 
D)  all countries classified as low-income DVCs have had declining per capita GDPs.

Question 4

Economic growth in the DVCs might increase if IACs

Accepted Answer

A)  reduce their tariffs and import quotas. 
B)  encourage more immigration of highly skilled DVC workers. 
C)  outlaw direct private investment abroad by IAC corporations. 
D)  discourage capital flight to the DVCs. 
A)  reduce their tariffs and import quotas. 
B)  encourage more immigration of highly skilled DVC workers. 
C)  outlaw direct private investment abroad by IAC corporations. 
D)  discourage capital flight to the DVCs.

Question 5

A recommended policy for developing countries to stimulate economic growth would be

Accepted Answer

A)  abolishing central banks. 
B)  more central planning by government. 
C)  encouraging more direct foreign investment. 
D)  expanding employment in state industries. 
A)  abolishing central banks. 
B)  more central planning by government. 
C)  encouraging more direct foreign investment. 
D)  expanding employment in state industries.

Question 6

Which of the following statements is correct?

Accepted Answer

A)  Saving is high in less-developed nations because the opportunities for consumption are limited. 
B)  For developing nations, the annual rate of population increase is about 5 percent. 
C)  Most of the labor forces of developing nations are engaged in light industrial production. 
D)  Investment is low in developing nations, making it difficult to increase productivity and incomes. 
A)  Saving is high in less-developed nations because the opportunities for consumption are limited. 
B)  For developing nations, the annual rate of population increase is about 5 percent. 
C)  Most of the labor forces of developing nations are engaged in light industrial production. 
D)  Investment is low in developing nations, making it difficult to increase productivity and incomes.

Question 7

Approximately what percentage of the world's income is received by the poorest one-fifth of the world's population?

Accepted Answer

A)  2 
B)  5 
C)  7 
D)  10 
A)  2 
B)  5 
C)  7 
D)  10

Question 8

The World Bank operates primarily as a

Accepted Answer

A)  deposit institution for nations' gold supplies. 
B)  coordinator for private banks in major nations. 
C)  lender of last resort to less-developed nations. 
D)  U.S. government agency that supervises banks worldwide. 
A)  deposit institution for nations' gold supplies. 
B)  coordinator for private banks in major nations. 
C)  lender of last resort to less-developed nations. 
D)  U.S. government agency that supervises banks worldwide.

Question 9

Many economists believe that the key to breaking the vicious circle of poverty is to

Accepted Answer

A)  cut down the mortality rates in poor nations. 
B)  reduce the birth rates in poor nations. 
C)  increase the mobility of labor and migration. 
D)  increase the rate of capital accumulation in poor nations. 
A)  cut down the mortality rates in poor nations. 
B)  reduce the birth rates in poor nations. 
C)  increase the mobility of labor and migration. 
D)  increase the rate of capital accumulation in poor nations.

Question 10

One major path that leads to growth in both developing nations (DVCs) as well industrially advanced nations (IACs) is that productive resources must be

Accepted Answer

A)  owned and managed by the public sector. 
B)  distributed more equitably across business sectors. 
C)  reallocated to export industries. 
D)  used more efficiently. 
A)  owned and managed by the public sector. 
B)  distributed more equitably across business sectors. 
C)  reallocated to export industries. 
D)  used more efficiently.

Question 11

Which of the following is not a way for industrially advanced countries (IACs) to help developing countries (DVCs) achieve faster economic growth?

Accepted Answer

A)  expanding trade 
B)  admitting more temporary workers 
C)  subsidizing their own (i.e., the IACs') agricultural sectors 
D)  discouraging arms sales 
A)  expanding trade 
B)  admitting more temporary workers 
C)  subsidizing their own (i.e., the IACs') agricultural sectors 
D)  discouraging arms sales

Question 12

Income gains in the poorest DVCs may increase population growth initially, at least for a while, due to the following reasons except

Accepted Answer

A)  declining death rates 
B)  increasing birth rates 
C)  reduced infant mortality 
D)  decreasing life expectancy 
A)  declining death rates 
B)  increasing birth rates 
C)  reduced infant mortality 
D)  decreasing life expectancy

Question 13

Increases in the total real output of many DVCs do not increase the nation's standard of living because

Accepted Answer

A)  diminishing returns may be encountered in increasing total output. 
B)  population increases may dissipate the increase in real output. 
C)  disguised unemployment in agriculture will persist. 
D)  surplus farm labor may move from rural areas to industrial areas, causing unemployment. 
A)  diminishing returns may be encountered in increasing total output. 
B)  population increases may dissipate the increase in real output. 
C)  disguised unemployment in agriculture will persist. 
D)  surplus farm labor may move from rural areas to industrial areas, causing unemployment.

Question 14

Reduction of tariff barriers against DVC imports would benefit both the DVCs and the IACs.

Accepted Answer

A) True 
 B)False

Question 15

The absolute income gap between the IACs and the DVCs has

Accepted Answer

A)  remained constant over time. 
B)  increased over time. 
C)  decreased over time. 
D)  increased in nominal terms but decreased in real terms. 
A)  remained constant over time. 
B)  increased over time. 
C)  decreased over time. 
D)  increased in nominal terms but decreased in real terms.

Question 16

The diversion of surplus labor in agriculture to the production of schools or roads in developing countries is described as

Accepted Answer

A)  land reform. 
B)  the brain drain. 
C)  in-kind investment. 
D)  a capital-using technological advance. 
A)  land reform. 
B)  the brain drain. 
C)  in-kind investment. 
D)  a capital-using technological advance.

Question 17

The lack of an entrepreneurial class in developing nations tends to

Accepted Answer

A)  keep workers from migrating to cities from rural areas. 
B)  reduce the level of capital investment. 
C)  force the need for land reform. 
D)  keep governments stable. 
A)  keep workers from migrating to cities from rural areas. 
B)  reduce the level of capital investment. 
C)  force the need for land reform. 
D)  keep governments stable.

Question 18

Most of the flow of foreign aid goes to

Accepted Answer

A)  the poorest of developing countries (DVCs). 
B)  the most affluent of the developing country populations. 
C)  the smallest developing countries. 
D)  about 70 percent of the world's poorest people. 
A)  the poorest of developing countries (DVCs). 
B)  the most affluent of the developing country populations. 
C)  the smallest developing countries. 
D)  about 70 percent of the world's poorest people.

Question 19

A new fertilizer that is better suited to a nation's topography and climate is an example of a technological advance that is

Accepted Answer

A)  capital using. 
B)  capital saving. 
C)  capital intensive. 
D)  an in-kind investment. 
A)  capital using. 
B)  capital saving. 
C)  capital intensive. 
D)  an in-kind investment.

Question 20

Making "soft loans"-loans that may not be self-liquidating-to the very poorest of the developing countries on relatively liberal terms is the primary function of the

Accepted Answer

A)  United Nations. 
B)  International Finance Corporation. 
C)  New Global Compact. 
D)  International Development Association. 
A)  United Nations. 
B)  International Finance Corporation. 
C)  New Global Compact. 
D)  International Development Association.

Exam 28: The Economics of Developing Countries

The vicious circle of poverty is based on the connections between low income, low saving, low investment, and low productivity.

A study concludes that in DVCs, rising incomes must first be achieved and only then will there be slower population growth. What view of DVC population growth would this study be supporting?

In recent decades,

Economic growth in the DVCs might increase if IACs

A recommended policy for developing countries to stimulate economic growth would be

Which of the following statements is correct?

Approximately what percentage of the world's income is received by the poorest one-fifth of the world's population?

The World Bank operates primarily as a

Many economists believe that the key to breaking the vicious circle of poverty is to

One major path that leads to growth in both developing nations (DVCs) as well industrially advanced nations (IACs) is that productive resources must be

Which of the following is not a way for industrially advanced countries (IACs) to help developing countries (DVCs) achieve faster economic growth?

Income gains in the poorest DVCs may increase population growth initially, at least for a while, due to the following reasons except

Increases in the total real output of many DVCs do not increase the nation's standard of living because

Reduction of tariff barriers against DVC imports would benefit both the DVCs and the IACs.

The absolute income gap between the IACs and the DVCs has

The diversion of surplus labor in agriculture to the production of schools or roads in developing countries is described as

The lack of an entrepreneurial class in developing nations tends to

Most of the flow of foreign aid goes to

A new fertilizer that is better suited to a nation's topography and climate is an example of a technological advance that is

Making "soft loans"-loans that may not be self-liquidating-to the very poorest of the developing countries on relatively liberal terms is the primary function of the

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

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