Question 1

Most of the loanable funds available to the World Bank to lend to developing nations come from

Accepted Answer

A)  the sale of oil. 
B)  developing nations. 
C)  the world's wealthiest nations. 
D)  the sale of international bonds that are issued by the World Bank. 
A)  the sale of oil. 
B)  developing nations. 
C)  the world's wealthiest nations. 
D)  the sale of international bonds that are issued by the World Bank. C

Question 2

What is the mission of the World Bank?

Accepted Answer

The World Bank, which was established after World War II, is charged with the mission of providing long-term loans for specific capital investment projects. In the past thirty years the bank is increasingly involved in financing projects that aim to reduce poverty.

Question 3

The funds that nation's have on account at the International Monetary Fund is measured in

Accepted Answer

A)  U.S. dollars. 
B)  the currency of the nation that has deposited the funds. 
C)  a quota subscription. 
D)  an international unit of accounting called special drawing rights. 
A)  U.S. dollars. 
B)  the currency of the nation that has deposited the funds. 
C)  a quota subscription. 
D)  an international unit of accounting called special drawing rights. D

Question 4

Investors are often willing to take the risks associated with investing in capital goods in developing nations because developing nations

Accepted Answer

A)  always insure the investments. 
B)  insure a small return on investment. 
C)  get the International Monetary Fund (IMF) to back investments through a series of loan guarantees. 
D)  have a large portion of the world's unutilized or underutilized resources and hence profit potential. 
A)  always insure the investments. 
B)  insure a small return on investment. 
C)  get the International Monetary Fund (IMF) to back investments through a series of loan guarantees. 
D)  have a large portion of the world's unutilized or underutilized resources and hence profit potential.

Question 5

All of the following are examples of institutions that promote real economic growth EXCEPT

Accepted Answer

A)  an efficient judicial system used to enforce contracts. 
B)  patent laws that protect innovation. 
C)  complex rules associated with business licensing used to promote careful business growth. 
D)  strong law enforcement used to protect business interests. 
A)  an efficient judicial system used to enforce contracts. 
B)  patent laws that protect innovation. 
C)  complex rules associated with business licensing used to promote careful business growth. 
D)  strong law enforcement used to protect business interests.

Question 6

Which organization functions as a lender of last resort for national governments?

Accepted Answer

A)  the World Bank 
B)  the U.S. Treasury 
C)  the Federal Reserve Bank 
D)  the International Monetary Fund 
A)  the World Bank 
B)  the U.S. Treasury 
C)  the Federal Reserve Bank 
D)  the International Monetary Fund

Question 7

The international unit of accounting used by the International Monetary Fund (IMF) is called

Accepted Answer

A)  the Eurodollar. 
B)  the IMF dollar. 
C)  the quota subscription. 
D)  special drawing rights. 
A)  the Eurodollar. 
B)  the IMF dollar. 
C)  the quota subscription. 
D)  special drawing rights.

Question 8

According to the text, is there any relationship between bureaucratic inefficiency and economic growth?

Accepted Answer

A)  Yes, bureaucratic inefficiency and economic growth are positively related. 
B)  Yes, but only in the most economically developed nations. 
C)  Yes, bureaucratic inefficiency and economic growth are inversely related. 
D)  No. Some nations' economies grow rapidly despite their inefficient governments while others collapse with inefficient governments. 
A)  Yes, bureaucratic inefficiency and economic growth are positively related. 
B)  Yes, but only in the most economically developed nations. 
C)  Yes, bureaucratic inefficiency and economic growth are inversely related. 
D)  No. Some nations' economies grow rapidly despite their inefficient governments while others collapse with inefficient governments.

Question 9

Which of the following is the term used to describe the expansion of a country's per capita real GDP?

Accepted Answer

A)  economic growth 
B)  technological change 
C)  change in the labor force 
D)  change in factor incomes 
A)  economic growth 
B)  technological change 
C)  change in the labor force 
D)  change in factor incomes

Question 10

Which of the following is NOT a method for promoting global economic growth?

Accepted Answer

A)  Rely on private markets to direct capital goods toward their best use. 
B)  Count on developed nations to develop policies that promote economic growth in developing nations. 
C)  Encourage population growth so that developing nations' labor supply increases. 
D)  market based approach 
A)  Rely on private markets to direct capital goods toward their best use. 
B)  Count on developed nations to develop policies that promote economic growth in developing nations. 
C)  Encourage population growth so that developing nations' labor supply increases. 
D)  market based approach

Question 11

Suppose a country has experienced relatively steady growth of aggregate real GDP. A higher population growth tends to

Accepted Answer

A)  reduce the growth of per capita real GDP. 
B)  increase the growth of per capita real GDP. 
C)  increase the level of economic freedom. 
D)  increase the level of dead capital. 
A)  reduce the growth of per capita real GDP. 
B)  increase the growth of per capita real GDP. 
C)  increase the level of economic freedom. 
D)  increase the level of dead capital.

Question 12

The problem of dead capital can be eliminated by

Accepted Answer

A)  returning all privately owned capital to the government. 
B)  increasing the labor force participation rate. 
C)  making it easier for people to establish legal ownership of productive capital. 
D)  restricting population growth. 
A)  returning all privately owned capital to the government. 
B)  increasing the labor force participation rate. 
C)  making it easier for people to establish legal ownership of productive capital. 
D)  restricting population growth.

Question 13

The inefficiencies associated with dead capital

Accepted Answer

A)  lead to increased consumption. 
B)  reduce the rate of return on investment. 
C)  increase the amount of investment as businesses look for more technologically advanced capital. 
D)  lead to more economic freedom as firms try to get rid of the inefficient capital. 
A)  lead to increased consumption. 
B)  reduce the rate of return on investment. 
C)  increase the amount of investment as businesses look for more technologically advanced capital. 
D)  lead to more economic freedom as firms try to get rid of the inefficient capital.

Question 14

An international financial crisis is most often caused by

Accepted Answer

A)  a nation's central bank lowering domestic interest rates. 
B)  a government refusing to pay its dues to the United Nations. 
C)  foreign investments and loans being withdrawn from a nation. 
D)  a drop in the value of the U.S. dollar. 
A)  a nation's central bank lowering domestic interest rates. 
B)  a government refusing to pay its dues to the United Nations. 
C)  foreign investments and loans being withdrawn from a nation. 
D)  a drop in the value of the U.S. dollar.

Question 15

A major contributor to a country's real rate of economic growth is its real GDP growth relative to its

Accepted Answer

A)  inflation. 
B)  population size. 
C)  money growth. 
D)  none of the above. 
A)  inflation. 
B)  population size. 
C)  money growth. 
D)  none of the above.

Question 16

The primary source of funds for the World Bank is

Accepted Answer

A)  quota subscriptions. 
B)  private financial markets. 
C)  the world's wealthiest countries. 
D)  the New York Stock Exchange. 
A)  quota subscriptions. 
B)  private financial markets. 
C)  the world's wealthiest countries. 
D)  the New York Stock Exchange.

Question 17

Developing countries are damaged by dead capital because

Accepted Answer

A)  it replaces too many workers, creating unemployment. 
B)  resulting inefficiencies greatly reduce the rate of return on capital investment. 
C)  it must be sold as scrap. 
D)  it reduces too much household saving. 
A)  it replaces too many workers, creating unemployment. 
B)  resulting inefficiencies greatly reduce the rate of return on capital investment. 
C)  it must be sold as scrap. 
D)  it reduces too much household saving.

Question 18

The World Bank specializes in making loans to promote

Accepted Answer

A)  short-term assistance when a nation experiences a financial crisis. 
B)  so-called stand-by arrangements and credits. 
C)  financial stability. 
D)  long-term economic development. 
A)  short-term assistance when a nation experiences a financial crisis. 
B)  so-called stand-by arrangements and credits. 
C)  financial stability. 
D)  long-term economic development.

Question 19

A higher population growth rate can potentially lead to a higher rate of growth in per capita real GDP if

Accepted Answer

A)  it leads to an increase in the amount of dead capital. 
B)  it leads to greater democracy in a nation. 
C)  young workers replace older workers. 
D)  there is a greater labor force participation rate. 
A)  it leads to an increase in the amount of dead capital. 
B)  it leads to greater democracy in a nation. 
C)  young workers replace older workers. 
D)  there is a greater labor force participation rate.

Question 20

Which of the following is NOT a function of the International Monetary Fund?

Accepted Answer

A)  serve as lender of last resort for national governments 
B)  administer an international foreign exchange system 
C)  establish the SDR system nations utilize to settle international payment obligations 
D)  establish and administer each nation's fiscal and monetary policies 
A)  serve as lender of last resort for national governments 
B)  administer an international foreign exchange system 
C)  establish the SDR system nations utilize to settle international payment obligations 
D)  establish and administer each nation's fiscal and monetary policies

Exam 18: Policies and Prospects for Global Economic Growth

Most of the loanable funds available to the World Bank to lend to developing nations come from

What is the mission of the World Bank?

The funds that nation's have on account at the International Monetary Fund is measured in

Investors are often willing to take the risks associated with investing in capital goods in developing nations because developing nations

All of the following are examples of institutions that promote real economic growth EXCEPT

Which organization functions as a lender of last resort for national governments?

The international unit of accounting used by the International Monetary Fund (IMF) is called

According to the text, is there any relationship between bureaucratic inefficiency and economic growth?

Which of the following is the term used to describe the expansion of a country's per capita real GDP?

Which of the following is NOT a method for promoting global economic growth?

Suppose a country has experienced relatively steady growth of aggregate real GDP. A higher population growth tends to

The problem of dead capital can be eliminated by

The inefficiencies associated with dead capital

An international financial crisis is most often caused by

A major contributor to a country's real rate of economic growth is its real GDP growth relative to its

The primary source of funds for the World Bank is

Developing countries are damaged by dead capital because

The World Bank specializes in making loans to promote

A higher population growth rate can potentially lead to a higher rate of growth in per capita real GDP if

Which of the following is NOT a function of the International Monetary Fund?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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