Question 1

More than 80 percent of the world's income is earned by what percentage of the world's population?

Accepted Answer

A)  5 percent 
B)  10 percent 
C)  20 percent 
D)  40 percent 
A)  5 percent 
B)  10 percent 
C)  20 percent 
D)  40 percent

Question 2

Which of the following IACs (industrially advanced countries) gave the smallest share of its GDP to foreign aid or development assistance to DVCs (developing countries) in 2012?

Accepted Answer

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

Question 3

Developing nations tend to have a large entrepreneurial class but not sufficient capital investment.

Accepted Answer

A) True 
 B)False

Question 4

The poorest 20 percent of the world's population receive what percentage of world income?

Accepted Answer

A)  Less than 2 percent 
B)  About 4 percent 
C)  Around 8 percent 
D)  Close to 10 percent 
A)  Less than 2 percent 
B)  About 4 percent 
C)  Around 8 percent 
D)  Close to 10 percent

Question 5

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

Accepted Answer

A)  The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC 
B)  Capital flight reduces investment opportunities and the need for saving in DVCs 
C)  There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving 
D)  The domestic output of DVCs is so low that the absolute volume of saving is small 
A)  The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC 
B)  Capital flight reduces investment opportunities and the need for saving in DVCs 
C)  There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving 
D)  The domestic output of DVCs is so low that the absolute volume of saving is small

Question 6

One suggested policy that industrially advanced nations could adopt to foster economic growth in less developed nations would be to:

Accepted Answer

A)  Leave the responsibility to the World Bank 
B)  Direct foreign aid to the poorest DVCs 
C)  Recruit more skilled workers from DVCs 
D)  Target the banking sector for the most help 
A)  Leave the responsibility to the World Bank 
B)  Direct foreign aid to the poorest DVCs 
C)  Recruit more skilled workers from DVCs 
D)  Target the banking sector for the most help

Question 7

The vicious circle of poverty implies that there is no way to break the circle; the poor nations will always remain poor.

Accepted Answer

A) True 
 B)False

Question 8

Per capita income in the United States in 2010 was how many times greater than that in China?

Accepted Answer

A)  3 times 
B)  6 times 
C)  11 times 
D)  17 times 
A)  3 times 
B)  6 times 
C)  11 times 
D)  17 times

Question 9

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 10

Low-income developing countries generally have the following characteristics, except:

Accepted Answer

A)  Low population growth rates 
B)  Low levels of industrialization 
C)  Dependency on exports of agricultural products or raw materials 
D)  Minimal amounts of capital resources 
A)  Low population growth rates 
B)  Low levels of industrialization 
C)  Dependency on exports of agricultural products or raw materials 
D)  Minimal amounts of capital resources

Question 11

Based on population and economic development trends, the world population is expected to ____ in the last part of this century.

Accepted Answer

A)  Explode 
B)  Increase mildly 
C)  Become stable and constant 
D)  Decline 
A)  Explode 
B)  Increase mildly 
C)  Become stable and constant 
D)  Decline

Question 12

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)  Increased at the same rate as the population grows 
B)  Distributed more equitably across business sectors 
C)  Reallocated to export industries 
D)  Used more efficiently 
A)  Increased at the same rate as the population grows 
B)  Distributed more equitably across business sectors 
C)  Reallocated to export industries 
D)  Used more efficiently

Question 13

What is needed to aid capital formation in developing countries?

Accepted Answer

A)  More capital flight 
B)  More oil resources 
C)  More entrepreneurship 
D)  Higher price supports for products 
A)  More capital flight 
B)  More oil resources 
C)  More entrepreneurship 
D)  Higher price supports for products

Question 14

Making "soft loans"-loans which 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

Question 15

One reason why foreign aid is viewed as harmful is that it promotes dependency.

Accepted Answer

A) True 
 B)False

Question 16

An institutional change that is needed in most developing nations is:

Accepted Answer

A)  The will to develop 
B)  Reduced foreign aid 
C)  Birth control 
D)  Land reform 
A)  The will to develop 
B)  Reduced foreign aid 
C)  Birth control 
D)  Land reform

Question 17

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 18

The traditional view regarding population and growth in DVCs is that:

Accepted Answer

A)  The most important factor affecting population growth in DVCs is per capita consumption of energy 
B)  Unemployment and underemployment are the major sources of population growth in DVCs 
C)  Reduced birthrates must come first in DVCs, and then higher per capita incomes will follow 
D)  Higher per capita incomes must come first in DVCs, and then reduced birth rates will follow 
A)  The most important factor affecting population growth in DVCs is per capita consumption of energy 
B)  Unemployment and underemployment are the major sources of population growth in DVCs 
C)  Reduced birthrates must come first in DVCs, and then higher per capita incomes will follow 
D)  Higher per capita incomes must come first in DVCs, and then reduced birth rates will follow

Question 19

Without an abundant endowment of natural resources, a nation cannot achieve rapid economic growth.

Accepted Answer

A) True 
 B)False

Question 20

Population expansion can impede economic development for the following reasons, except:

Accepted Answer

A)  Reduced saving and investment rates 
B)  Reduced productivity of labor 
C)  Larger supply of labor 
D)  Contribution to urban congestion and problems 
A)  Reduced saving and investment rates 
B)  Reduced productivity of labor 
C)  Larger supply of labor 
D)  Contribution to urban congestion and problems

Exam 22: The Economics of Developing Countries

More than 80 percent of the world's income is earned by what percentage of the world's population?

Which of the following IACs (industrially advanced countries) gave the smallest share of its GDP to foreign aid or development assistance to DVCs (developing countries) in 2012?

Developing nations tend to have a large entrepreneurial class but not sufficient capital investment.

The poorest 20 percent of the world's population receive what percentage of world income?

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

One suggested policy that industrially advanced nations could adopt to foster economic growth in less developed nations would be to:

The vicious circle of poverty implies that there is no way to break the circle; the poor nations will always remain poor.

Per capita income in the United States in 2010 was how many times greater than that in China?

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

Low-income developing countries generally have the following characteristics, except:

Based on population and economic development trends, the world population is expected to ____ in the last part of this century.

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

What is needed to aid capital formation in developing countries?

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

One reason why foreign aid is viewed as harmful is that it promotes dependency.

An institutional change that is needed in most developing nations is:

Most developing countries (DVCs) exhibit a low level of:

The traditional view regarding population and growth in DVCs is that:

Without an abundant endowment of natural resources, a nation cannot achieve rapid economic growth.

Population expansion can impede economic development for the following reasons, except:

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

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

Fiscal Policy, Deficits, and Debt

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

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