Question 1

When a foreign company engages in riskier behavior after it has received international investment funds, it is known as

Accepted Answer

A)  portfolio investment. 
B)  moral hazard. 
C)  foreign direct investment. 
D)  adverse selection. 
A)  portfolio investment. 
B)  moral hazard. 
C)  foreign direct investment. 
D)  adverse selection.

Question 2

All of the following are barriers to international investment EXCEPT

Accepted Answer

A)  symmetric information. 
B)  adverse selection. 
C)  incomplete information. 
D)  moral hazard. 
A)  symmetric information. 
B)  adverse selection. 
C)  incomplete information. 
D)  moral hazard.

Question 3

Economic freedom is

Accepted Answer

A)  the right to vote in an election for a political leader. 
B)  the right to own private property and to exchange goods with minimal government interference. 
C)  the amount of control that the government has in a market. 
D)  present as long as private individuals own businesses. 
A)  the right to vote in an election for a political leader. 
B)  the right to own private property and to exchange goods with minimal government interference. 
C)  the amount of control that the government has in a market. 
D)  present as long as private individuals own businesses.

Question 4

Which of the following equations is correct?

Accepted Answer

A)  rate of growth of per capita real GDP = rate of growth in real GDP - rate of growth of population 
B)  rate of growth of per capita real GDP = rate of growth in real GDP + rate of growth of population 
C)  rate of growth in real GDP = rate of growth of per capita real GDP - rate of growth of population 
D)  rate of growth in real GDP = rate of growth of per capita real GDP + rate of growth of population 
A)  rate of growth of per capita real GDP = rate of growth in real GDP - rate of growth of population 
B)  rate of growth of per capita real GDP = rate of growth in real GDP + rate of growth of population 
C)  rate of growth in real GDP = rate of growth of per capita real GDP - rate of growth of population 
D)  rate of growth in real GDP = rate of growth of per capita real GDP + rate of growth of population

Question 5

In the determination of economic growth, political freedom

Accepted Answer

A)  is more important than economic freedom. 
B)  appears to be less important than economic freedom. 
C)  is inversely related to economic freedom. 
D)  is equally as important as economic freedom. 
A)  is more important than economic freedom. 
B)  appears to be less important than economic freedom. 
C)  is inversely related to economic freedom. 
D)  is equally as important as economic freedom.

Question 6

Where does the World Bank get its funds?

Accepted Answer

A)  from printing its own money 
B)  from tariffs collected on goods traded internationally 
C)  from governments of the wealthiest nations and from private financial markets 
D)  from seizing dead capital in developing nations and selling it at auction 
A)  from printing its own money 
B)  from tariffs collected on goods traded internationally 
C)  from governments of the wealthiest nations and from private financial markets 
D)  from seizing dead capital in developing nations and selling it at auction

Question 7

According to the text, the significant decrease in the average annual rate of economic growth among advanced nations in periods after 2000 was the result of

Accepted Answer

A)  high inflation. 
B)  a substantial decrease in foreign investment. 
C)  secular stagnation. 
D)  high population growth. 
A)  high inflation. 
B)  a substantial decrease in foreign investment. 
C)  secular stagnation. 
D)  high population growth.

Question 8

Foreign direct investment is defined as

Accepted Answer

A)  the purchase of more than 10 percent of the shares of ownership in a company in another nation. 
B)  funds allocated into a foreign stock market that represent an ownership share of firms less than 5 percent. 
C)  opening a deposit account in a foreign bank. 
D)  purchasing government bonds. 
A)  the purchase of more than 10 percent of the shares of ownership in a company in another nation. 
B)  funds allocated into a foreign stock market that represent an ownership share of firms less than 5 percent. 
C)  opening a deposit account in a foreign bank. 
D)  purchasing government bonds.

Question 9

If a country has a 4 percent annual growth in real GDP and a one percent growth in population, its per capita growth of real GDP is

Accepted Answer

A)  five percent. 
B)  four percent. 
C)  three percent. 
D)  1/4 = 0.25 percent. 
A)  five percent. 
B)  four percent. 
C)  three percent. 
D)  1/4 = 0.25 percent.

Question 10

Portfolio investment means buying

Accepted Answer

A)  less than 10 percent of stock shares of of a foreign company. 
B)  more than 50 percent of stock shares of a foreign company. 
C)  a combination of different companies' stock shares. 
D)  bonds through a financial company. 
A)  less than 10 percent of stock shares of of a foreign company. 
B)  more than 50 percent of stock shares of a foreign company. 
C)  a combination of different companies' stock shares. 
D)  bonds through a financial company.

Question 11

A nation's economic growth is more rapid when

Accepted Answer

A)  the government owns all capital resources in a nation. 
B)  capital resources are devoted to their most efficient use. 
C)  there are barriers to establishing legal ownership of capital resources. 
D)  scarce resources are made available for all citizens free of charge. 
A)  the government owns all capital resources in a nation. 
B)  capital resources are devoted to their most efficient use. 
C)  there are barriers to establishing legal ownership of capital resources. 
D)  scarce resources are made available for all citizens free of charge.

Question 12

How did the original focus of the IMF differ from that of the World Bank?

Accepted Answer

A)  The IMF provided short-term loans and the World Bank provided long-term loans. 
B)  The IMF assisted wealthy nations and the World Bank assisted developing nations. 
C)  The IMF gave grants to developing countries and the World Bank made loans. 
D)  The IMF dealt in North and South America only, and the World Bank dealt with the rest of the world. 
A)  The IMF provided short-term loans and the World Bank provided long-term loans. 
B)  The IMF assisted wealthy nations and the World Bank assisted developing nations. 
C)  The IMF gave grants to developing countries and the World Bank made loans. 
D)  The IMF dealt in North and South America only, and the World Bank dealt with the rest of the world.

Question 13

Portfolio investment and foreign direct investment are methods through which

Accepted Answer

A)  ownership in assets are acquired in countries other than one's home country. 
B)  U.S. residents invest funds in companies that export goods. 
C)  U.S. residents invest funds in companies that import goods. 
D)  short-term investments are converted to long-term ones. 
A)  ownership in assets are acquired in countries other than one's home country. 
B)  U.S. residents invest funds in companies that export goods. 
C)  U.S. residents invest funds in companies that import goods. 
D)  short-term investments are converted to long-term ones.

Question 14

Suppose a nation's real Gross Domestic Product (GDP) grows at a rate of 4 percent per year while its population grows 4 percent annually. Given this information, this nation's annual rate of per capita real GDP growth is equal to

Accepted Answer

A)  0 percent. 
B)  1 percent. 
C)  8 percent. 
D)  -4 percent. 
A)  0 percent. 
B)  1 percent. 
C)  8 percent. 
D)  -4 percent.

Question 15

The International Monetary Fund was created to achieve each of the following goals EXCEPT

Accepted Answer

A)  lend funds to countries with international payment problems. 
B)  finance large government infrastructure projects. 
C)  monitor and offer advice on the exchange rate policies of member nations. 
D)  encourage free convertibility of the currencies of member nations. 
A)  lend funds to countries with international payment problems. 
B)  finance large government infrastructure projects. 
C)  monitor and offer advice on the exchange rate policies of member nations. 
D)  encourage free convertibility of the currencies of member nations.

Question 16

An international financial crisis is

Accepted Answer

A)  when at least one developing country defaults on its loans. 
B)  when a major bank defaults. 
C)  when a world leader is deposed from office. 
D)  the rapid withdrawal of foreign investments and loans from a nation. 
A)  when at least one developing country defaults on its loans. 
B)  when a major bank defaults. 
C)  when a world leader is deposed from office. 
D)  the rapid withdrawal of foreign investments and loans from a nation.

Question 17

For advanced nations, the average annual rate of growth or real per capital GDP

Accepted Answer

A)  was lower during the 1981-1999 period than during the 2000-2017 period. 
B)  was higher during the 1981-1999 period than during the 2000-2017 period. 
C)  was roughly the same between the 1981-1999 period and the 2000-2017 period. 
D)  has shown random patterns since 1981. 
A)  was lower during the 1981-1999 period than during the 2000-2017 period. 
B)  was higher during the 1981-1999 period than during the 2000-2017 period. 
C)  was roughly the same between the 1981-1999 period and the 2000-2017 period. 
D)  has shown random patterns since 1981.

Question 18

Extensive government restrictions on the use of capital are likely to

Accepted Answer

A)  create dead capital. 
B)  enhance economic growth. 
C)  enhance economic freedom. 
D)  result in capital resources being devoted to their most efficient uses. 
A)  create dead capital. 
B)  enhance economic growth. 
C)  enhance economic freedom. 
D)  result in capital resources being devoted to their most efficient uses.

Question 19

The right to openly support and to elect leaders in a democratic way is known as

Accepted Answer

A)  political freedom. 
B)  economic freedom. 
C)  constitutional freedom. 
D)  external freedom. 
A)  political freedom. 
B)  economic freedom. 
C)  constitutional freedom. 
D)  external freedom.

Question 20

The percentage change in per capita real GDP measures economic growth because it takes into account all of the following variables EXCEPT

Accepted Answer

A)  the percentage change in population. 
B)  the percentage change in the inflation rates. 
C)  the percentage change in nominal GDP. 
D)  the percentage change in the quality of life. 
A)  the percentage change in population. 
B)  the percentage change in the inflation rates. 
C)  the percentage change in nominal GDP. 
D)  the percentage change in the quality of life.

Exam 18: Policies and Prospects for Global Economic Growth

When a foreign company engages in riskier behavior after it has received international investment funds, it is known as

All of the following are barriers to international investment EXCEPT

Economic freedom is

Which of the following equations is correct?

In the determination of economic growth, political freedom

Where does the World Bank get its funds?

According to the text, the significant decrease in the average annual rate of economic growth among advanced nations in periods after 2000 was the result of

Foreign direct investment is defined as

If a country has a 4 percent annual growth in real GDP and a one percent growth in population, its per capita growth of real GDP is

Portfolio investment means buying

A nation's economic growth is more rapid when

How did the original focus of the IMF differ from that of the World Bank?

Portfolio investment and foreign direct investment are methods through which

Suppose a nation's real Gross Domestic Product (GDP) grows at a rate of 4 percent per year while its population grows 4 percent annually. Given this information, this nation's annual rate of per capita real GDP growth is equal to

The International Monetary Fund was created to achieve each of the following goals EXCEPT

An international financial crisis is

For advanced nations, the average annual rate of growth or real per capital GDP

Extensive government restrictions on the use of capital are likely to

The right to openly support and to elect leaders in a democratic way is known as

The percentage change in per capita real GDP measures economic growth because it takes into account all of the following variables EXCEPT

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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