Question 1

Infrastructure is best illustrated by:

Accepted Answer

A)  farm equipment. 
B)  school buildings and highways. 
C)  machinery and equipment for the production of consumer goods. 
D)  government tax revenues. 
A)  farm equipment. 
B)  school buildings and highways. 
C)  machinery and equipment for the production of consumer goods. 
D)  government tax revenues.

Question 2

Which of the following describes the vicious circle of poverty?

Accepted Answer

A)  Government spending for public goods is inflationary and this undermines incentives to save and invest. 
B)  Higher incomes increase consumption at the expense of capital accumulation,which causes income to fall. 
C)  Low per capita incomes cause low levels of saving and investment,which mean low productivity and therefore low incomes. 
D)  A growing national income increases the demand for money,which increases the interest rate and reduces investment. 
A)  Government spending for public goods is inflationary and this undermines incentives to save and invest. 
B)  Higher incomes increase consumption at the expense of capital accumulation,which causes income to fall. 
C)  Low per capita incomes cause low levels of saving and investment,which mean low productivity and therefore low incomes. 
D)  A growing national income increases the demand for money,which increases the interest rate and reduces investment.

Question 3

It is sometimes difficult to transfer the advanced technologies of the industrialized nations to the DVCs because:

Accepted Answer

A)  the technologies of the IACs are frequently based on relatively expensive labor and relatively cheap capital. 
B)  the resource endowments of the IACs and the DVCs are highly similar. 
C)  international patent laws prohibit such transfers. 
D)  the technologies of the IACs are frequently based on relatively cheap labor and relatively expensive capital. 
A)  the technologies of the IACs are frequently based on relatively expensive labor and relatively cheap capital. 
B)  the resource endowments of the IACs and the DVCs are highly similar. 
C)  international patent laws prohibit such transfers. 
D)  the technologies of the IACs are frequently based on relatively cheap labor and relatively expensive capital.

Question 4

If the real output of a DVC increases from $200 billion to $260 billion and its population increases from 100 to 120 million,its real per capita output will have:

Accepted Answer

A)  remained unchanged. 
B)  increased by about $167. 
C)  increased by about $55. 
D)  decreased by about $20. 
A)  remained unchanged. 
B)  increased by about $167. 
C)  increased by about $55. 
D)  decreased by about $20.

Question 5

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 6

DVCs tend to have permanent shortages of farm labor.

Accepted Answer

A) True 
 B)False

Question 7

Rapid population growth can be an obstacle to economic development:

Accepted Answer

A)  because it can translate a relatively large increase in real output into a small increase in real output per capita. 
B)  because more investment will be required to simply maintain the quantity of capital goods per person. 
C)  because it may lead to the overutilization and therefore ecological degradation of farmland. 
D)  for all of these reasons. 
A)  because it can translate a relatively large increase in real output into a small increase in real output per capita. 
B)  because more investment will be required to simply maintain the quantity of capital goods per person. 
C)  because it may lead to the overutilization and therefore ecological degradation of farmland. 
D)  for all of these reasons.

Question 8

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 9

The international agency that lends money to DVCs for economic development projects is the:

Accepted Answer

A)  World Bank. 
B)  International Monetary Fund (IMF). 
C)  World Trade Organization (WTO). 
D)  World Credit Union. 
A)  World Bank. 
B)  International Monetary Fund (IMF). 
C)  World Trade Organization (WTO). 
D)  World Credit Union.

Question 10

Underemployment occurs:

Accepted Answer

A)  when workers do not have jobs. 
B)  when farm workers become more productive. 
C)  when workers are working fewer hours than they desire or when they are working less productively than they are capable. 
D)  in IACs but not in the DVCs. 
A)  when workers do not have jobs. 
B)  when farm workers become more productive. 
C)  when workers are working fewer hours than they desire or when they are working less productively than they are capable. 
D)  in IACs but not in the DVCs.

Question 11

The primary function of the International Finance Corporation (IFC)is to:

Accepted Answer

A)  provide U.S.surplus food to low-income countries. 
B)  provide short-term loans to poor countries to finance international trade deficits. 
C)  make infrastructure loans,that is,loans for highways,schools,communication facilities,and so forth. 
D)  make loans to private enterprises in the DVCs. 
A)  provide U.S.surplus food to low-income countries. 
B)  provide short-term loans to poor countries to finance international trade deficits. 
C)  make infrastructure loans,that is,loans for highways,schools,communication facilities,and so forth. 
D)  make loans to private enterprises in the DVCs.

Question 12

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 13

In recent years,the industrially advanced nations as a group have provided foreign aid amounting to about what percentage of their aggregate outputs?

Accepted Answer

A)  0.25 percent. 
B)  0.7 percent. 
C)  1 percent. 
D)  2 percent. 
A)  0.25 percent. 
B)  0.7 percent. 
C)  1 percent. 
D)  2 percent.

Question 14

Population growth remains high in most DVCs:

Accepted Answer

A)  because religious and sociocultural considerations favor large families. 
B)  because children may provide economic security for aging parents. 
C)  because children provide agricultural labor in rural areas. 
D)  for all of these reasons. 
A)  because religious and sociocultural considerations favor large families. 
B)  because children may provide economic security for aging parents. 
C)  because children provide agricultural labor in rural areas. 
D)  for all of these reasons.

Question 15

To be classified as a low-income developing country,annual per capita income in 2010 needed to be:

Accepted Answer

A)  $1,005 or less. 
B)  $580 or less. 
C)  $3,723 or less. 
D)  $925 or less. 
A)  $1,005 or less. 
B)  $580 or less. 
C)  $3,723 or less. 
D)  $925 or less.

Question 16

The demographic transition view alleges that:

Accepted Answer

A)  the DVCs must first accept the use of birth control techniques to increase their standards of living. 
B)  population growth will only decline if mortality rates exceed birth rates. 
C)  if incomes first rise,population growth will then decline. 
D)  population growth has no bearing on a nation's per capita income. 
A)  the DVCs must first accept the use of birth control techniques to increase their standards of living. 
B)  population growth will only decline if mortality rates exceed birth rates. 
C)  if incomes first rise,population growth will then decline. 
D)  population growth has no bearing on a nation's per capita income.

Question 17

Which of these sets of nations are considered high-income economies?

Accepted Answer

A)  Brazil,Thailand,and South Africa. 
B)  China,India,and Russia. 
C)  Canada,Switzerland,and France. 
D)  United States,South Korea,and Mexico. 
A)  Brazil,Thailand,and South Africa. 
B)  China,India,and Russia. 
C)  Canada,Switzerland,and France. 
D)  United States,South Korea,and Mexico.

Question 18

Saving is low in many DVCs primarily because income is very equally distributed.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  less than 1 percent of its output. 
B)  about 2 percent of its output. 
C)  about 3 percent of its output. 
D)  about 5 percent of its output. 
A)  less than 1 percent of its output. 
B)  about 2 percent of its output. 
C)  about 3 percent of its output. 
D)  about 5 percent of its output.

Question 20

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.

Exam 41: The Economics of Developing Countries

Infrastructure is best illustrated by:

Which of the following describes the vicious circle of poverty?

It is sometimes difficult to transfer the advanced technologies of the industrialized nations to the DVCs because:

If the real output of a DVC increases from $200 billion to $260 billion and its population increases from 100 to 120 million,its real per capita output will have:

An economy's infrastructure refers to its:

DVCs tend to have permanent shortages of farm labor.

Rapid population growth can be an obstacle to economic development:

In recent years,the governments of the IACs have:

The international agency that lends money to DVCs for economic development projects is the:

Underemployment occurs:

The primary function of the International Finance Corporation (IFC)is to:

The demographic transition concept suggests that:

In recent years,the industrially advanced nations as a group have provided foreign aid amounting to about what percentage of their aggregate outputs?

Population growth remains high in most DVCs:

To be classified as a low-income developing country,annual per capita income in 2010 needed to be:

The demographic transition view alleges that:

Which of these sets of nations are considered high-income economies?

Saving is low in many DVCs primarily because income is very equally distributed.

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

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

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The United States and the Global Economy

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