Question 1

Microcredit refers to

Accepted Answer

A)  small-size stock markets with very limited capitalization. 
B)  a system of providing credit to small-business owners. 
C)  bond markets for governments of small nations. 
D)  deposits in small banks in developing nations. 
A)  small-size stock markets with very limited capitalization. 
B)  a system of providing credit to small-business owners. 
C)  bond markets for governments of small nations. 
D)  deposits in small banks in developing nations.

Question 2

Most developing countries (DVCs) exhibit a low level of

Accepted Answer

A)  illiteracy. 
B)  population growth. 
C)  life expectancy. 
D)  infant mortality. 
A)  illiteracy. 
B)  population growth. 
C)  life expectancy. 
D)  infant mortality.

Question 3

The exports of the DVCs consist largely of

Accepted Answer

A)  high-technology goods. 
B)  raw materials and farm products. 
C)  manufactured goods. 
D)  services and financial capital. 
A)  high-technology goods. 
B)  raw materials and farm products. 
C)  manufactured goods. 
D)  services and financial capital.

Question 4

A suggested policy for industrially advanced countries to adopt to encourage economic growth in developing countries would be

Accepted Answer

A)  cutting debt relief for DVCs. 
B)  directing foreign aid to the more affluent DVCs. 
C)  restricting immigration of low-skilled workers from DVCs. 
D)  reducing tariffs and import quotas on labor-intensive products. 
A)  cutting debt relief for DVCs. 
B)  directing foreign aid to the more affluent DVCs. 
C)  restricting immigration of low-skilled workers from DVCs. 
D)  reducing tariffs and import quotas on labor-intensive products.

Question 5

Most of the DVCs find it difficult to accumulate capital goods because

Accepted Answer

A)  the terms of trade prohibit the inflow of private capital from the advanced nations. 
B)  it is very difficult to restrict consumption and thus to free resources for capital goods production. 
C)  domestic monetary policies designed to achieve price stability result in low interest rates, thereby discouraging investment. 
D)  investment is interest inelastic in DVCs. 
A)  the terms of trade prohibit the inflow of private capital from the advanced nations. 
B)  it is very difficult to restrict consumption and thus to free resources for capital goods production. 
C)  domestic monetary policies designed to achieve price stability result in low interest rates, thereby discouraging investment. 
D)  investment is interest inelastic in DVCs.

Question 6

The government of a DVC may force the economy to save by deliberately causing inflation. This policy is undesirable because inflation may

Accepted Answer

A)  distort investment away from productive facilities and toward luxury housing and precious metals. 
B)  increase voluntary saving because the value of money is depreciating. 
C)  contribute to a balance of trade surplus. 
D)  entail all of these problems. 
A)  distort investment away from productive facilities and toward luxury housing and precious metals. 
B)  increase voluntary saving because the value of money is depreciating. 
C)  contribute to a balance of trade surplus. 
D)  entail all of these problems.

Question 7

Investment in-kind refers to the possibility that

Accepted Answer

A)  DVCs will invest for the purpose of becoming less dependent on world markets. 
B)  a DVC will overinvest in industries in which it has a comparative advantage, disrupting its development program. 
C)  newly established manufacturing firms may expand by reinvesting their profits. 
D)  surplus labor in, say, agriculture can be diverted to the production of simple capital goods such as earthen dams. 
A)  DVCs will invest for the purpose of becoming less dependent on world markets. 
B)  a DVC will overinvest in industries in which it has a comparative advantage, disrupting its development program. 
C)  newly established manufacturing firms may expand by reinvesting their profits. 
D)  surplus labor in, say, agriculture can be diverted to the production of simple capital goods such as earthen dams.

Question 8

Per capita incomes must first grow for birth rates to decline. This statement describes the

Accepted Answer

A)  human capital view of population growth. 
B)  traditional view of population growth. 
C)  capricious universe view. 
D)  demographic transition view of population growth. 
A)  human capital view of population growth. 
B)  traditional view of population growth. 
C)  capricious universe view. 
D)  demographic transition view of population growth.

Question 9

If population is expanding at the same rate as real output,

Accepted Answer

A)  real per capita output will increase. 
B)  real per capita output will decrease. 
C)  real per capita output will remain unchanged. 
D)  living standards will increase. 
A)  real per capita output will increase. 
B)  real per capita output will decrease. 
C)  real per capita output will remain unchanged. 
D)  living standards will increase.

Question 10

Capital flight is a problem facing DVCs that involves the

Accepted Answer

A)  difficulty of sustaining skilled workers in the government sector of the DVC economies. 
B)  transfer of private savings from DVCs to IACs. 
C)  flight of agricultural workers from rural to urban areas, especially capital cities, to take advantage of better job opportunities. 
D)  movement of capital goods from IACs to DVCs to avoid taxes. 
A)  difficulty of sustaining skilled workers in the government sector of the DVC economies. 
B)  transfer of private savings from DVCs to IACs. 
C)  flight of agricultural workers from rural to urban areas, especially capital cities, to take advantage of better job opportunities. 
D)  movement of capital goods from IACs to DVCs to avoid taxes.

Question 11

Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC. If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will

Accepted Answer

A)  remain unchanged at $19,000. 
B)  increase by $760. 
C)  decrease by $1,000. 
D)  increase by $19,760. 
A)  remain unchanged at $19,000. 
B)  increase by $760. 
C)  decrease by $1,000. 
D)  increase by $19,760.

Question 12

Which of these sets of nations consists of low-income developing nations?

Accepted Answer

A)  Brazil, Australia, and South Africa 
B)  Uganda, Madagascar, and Burkina Faso 
C)  Canada, Switzerland, and France 
D)  Germany, South Korea, and Mexico 
A)  Brazil, Australia, and South Africa 
B)  Uganda, Madagascar, and Burkina Faso 
C)  Canada, Switzerland, and France 
D)  Germany, South Korea, and Mexico

Question 13

For DVC per capita incomes to rise, birth rates must first be reduced. This statement describes the

Accepted Answer

A)  human capital view of population growth. 
B)  traditional view of population growth. 
C)  capricious universe view. 
D)  demographic transition view of population growth. 
A)  human capital view of population growth. 
B)  traditional view of population growth. 
C)  capricious universe view. 
D)  demographic transition view of population growth.

Question 14

In 2014, Wal-Mart's annual revenues were greater than the national incomes of

Accepted Answer

A)  the United States. 
B)  Germany. 
C)  all but 26 nations. 
D)  all nations except for the 5 largest ones. 
A)  the United States. 
B)  Germany. 
C)  all but 26 nations. 
D)  all nations except for the 5 largest ones.

Question 15

An economy's infrastructure refers to its

Accepted Answer

A)  public capital goods, such as roads, schools, and power facilities. 
B)  financial and banking institutions. 
C)  land and natural resources. 
D)  surplus supplies of unskilled labor. 
A)  public capital goods, such as roads, schools, and power facilities. 
B)  financial and banking institutions. 
C)  land and natural resources. 
D)  surplus supplies of unskilled labor.

Question 16

In recent years, U.S. foreign aid has been

Accepted Answer

A)  less than one-quarter of 1 percent of its output. 
B)  about 1 percent of its output. 
C)  about 3 percent of its output. 
D)  about 5 percent of its output. 
A)  less than one-quarter of 1 percent of its output. 
B)  about 1 percent of its output. 
C)  about 3 percent of its output. 
D)  about 5 percent of its output.

Question 17

Which of the following countries had the highest per capita income (on a purchasing power parity basis) in 2014?

Accepted Answer

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

Question 18

Which of the following IACs (industrially advanced countries) gave the largest share of its GDP to foreign aid or development assistance to DVCs (developing countries) in 2015?

Accepted Answer

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

Question 19

The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S. aid programs.

Accepted Answer

A) True 
 B)False

Question 20

A major complaint of DVCs about foreign aid from IACs is that it

Accepted Answer

A)  is allocated just to the poorest nations. 
B)  is equally borne by the donor nations. 
C)  needs to be quantitatively larger for DVCs. 
D)  takes too long a time to reach DVCs. 
A)  is allocated just to the poorest nations. 
B)  is equally borne by the donor nations. 
C)  needs to be quantitatively larger for DVCs. 
D)  takes too long a time to reach DVCs.

Exam 28: The Economics of Developing Countries

Microcredit refers to

Most developing countries (DVCs) exhibit a low level of

The exports of the DVCs consist largely of

A suggested policy for industrially advanced countries to adopt to encourage economic growth in developing countries would be

Most of the DVCs find it difficult to accumulate capital goods because

The government of a DVC may force the economy to save by deliberately causing inflation. This policy is undesirable because inflation may

Investment in-kind refers to the possibility that

Per capita incomes must first grow for birth rates to decline. This statement describes the

If population is expanding at the same rate as real output,

Capital flight is a problem facing DVCs that involves the

Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC. If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will

Which of these sets of nations consists of low-income developing nations?

For DVC per capita incomes to rise, birth rates must first be reduced. This statement describes the

In 2014, Wal-Mart's annual revenues were greater than the national incomes of

An economy's infrastructure refers to its

In recent years, U.S. foreign aid has been

Which of the following countries had the highest per capita income (on a purchasing power parity basis) in 2014?

Which of the following IACs (industrially advanced countries) gave the largest share of its GDP to foreign aid or development assistance to DVCs (developing countries) in 2015?

The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S. aid programs.

A major complaint of DVCs about foreign aid from IACs is that it

Limits, Alternatives, and Choices

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Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

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Pure Competition in the Short Run

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Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

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Income Inequality, Poverty, and Discrimination

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The Balance of Payments, Exchange Rates, and Trade Deficits

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