Question 1

Countries with a high level of bureaucratic inefficiency tend to have low rates of real GDP growth because

Accepted Answer

A)  of complications that keep capital goods from flowing to their most efficient use. 
B)  of poor accounting practices when determining real GDP. 
C)  of poor management skill development in companies. 
D)  they facilitate capital goods development. 
A)  of complications that keep capital goods from flowing to their most efficient use. 
B)  of poor accounting practices when determining real GDP. 
C)  of poor management skill development in companies. 
D)  they facilitate capital goods development.

Question 2

The World Bank was formed in

Accepted Answer

A)  1930. 
B)  1960. 
C)  1945. 
D)  1918. 
A)  1930. 
B)  1960. 
C)  1945. 
D)  1918.

Question 3

The World Bank has extended a loan to Country X to build a new toll road and counts on the repayment of the loan from the collected tolls. After the funds have been transferred to the country, the government decides to spend the money to build a new presidential palace. This is an example of

Accepted Answer

A)  hostile selection. 
B)  adverse selection. 
C)  moral hazard. 
D)  government risk. 
A)  hostile selection. 
B)  adverse selection. 
C)  moral hazard. 
D)  government risk.

Question 4

Assume that in the economy real GDP grows at a constant rate. There has just been a decrease in the rate of growth of the population. This implies that the

Accepted Answer

A)  rate of growth of per capita real GDP will decrease. 
B)  rate of growth of per capita real GDP will increase. 
C)  rate of growth of capital accumulation will decrease. 
D)  rate of growth of capital accumulation will increase. 
A)  rate of growth of per capita real GDP will decrease. 
B)  rate of growth of per capita real GDP will increase. 
C)  rate of growth of capital accumulation will decrease. 
D)  rate of growth of capital accumulation will increase.

Question 5

The purchase of more than ten percent of the shares of a foreign company is known as a(n)

Accepted Answer

A)  foreign direct investment. 
B)  International Monetary Fund (IMF) investment. 
C)  portfolio investment. 
D)  World Bank investment. 
A)  foreign direct investment. 
B)  International Monetary Fund (IMF) investment. 
C)  portfolio investment. 
D)  World Bank investment.

Question 6

The largest International Monetary Fund quota subscription, denominated in Special Drawing Rights, is held by

Accepted Answer

A)  the United States. 
B)  Japan. 
C)  China. 
D)  Russia. 
A)  the United States. 
B)  Japan. 
C)  China. 
D)  Russia.

Question 7

What will happen to the annual rate of growth of per capita real GDP if the annual rate of population growth increases and the annual rate of growth of real GDP goes down?

Accepted Answer

A)  It will increase since an increase in population means an increase in labor that translates into an increase in real GDP. 
B)  It will increase since the annual rate of growth of real GDP does not influence the growth rate of per capita real GDP. 
C)  It will decrease since an increase in the growth rate of population and a decrease in the growth rate of real GDP both work to decrease the growth of per capita real GDP. 
D)  The effect will depend upon whether the rate of population growth is greater than or less than the rate of growth of real GDP. 
A)  It will increase since an increase in population means an increase in labor that translates into an increase in real GDP. 
B)  It will increase since the annual rate of growth of real GDP does not influence the growth rate of per capita real GDP. 
C)  It will decrease since an increase in the growth rate of population and a decrease in the growth rate of real GDP both work to decrease the growth of per capita real GDP. 
D)  The effect will depend upon whether the rate of population growth is greater than or less than the rate of growth of real GDP.

Question 8

Adverse selection and moral hazard problems arise when there is

Accepted Answer

A)  complete information 
B)  asymmetric information. 
C)  too much information. 
D)  symmetric information. 
A)  complete information 
B)  asymmetric information. 
C)  too much information. 
D)  symmetric information.

Question 9

The following are obstacles to international investment EXCEPT

Accepted Answer

A)  rational expectations. 
B)  asymmetric information. 
C)  adverse selection. 
D)  moral hazard. 
A)  rational expectations. 
B)  asymmetric information. 
C)  adverse selection. 
D)  moral hazard.

Question 10

Which of the following is NOT true about dead capital?

Accepted Answer

A)  Dead capital can lead to a situation where resources are not efficiently employed. 
B)  Dead capital can inhibit economic growth. 
C)  Companies will be less likely to want to invest when a country has a lot of dead capital. 
D)  Dead capital will lead to higher investment returns. 
A)  Dead capital can lead to a situation where resources are not efficiently employed. 
B)  Dead capital can inhibit economic growth. 
C)  Companies will be less likely to want to invest when a country has a lot of dead capital. 
D)  Dead capital will lead to higher investment returns.

Question 11

To be a member of the Internal Monetary Fund a nation must deposit funds based on

Accepted Answer

A)  its national income. 
B)  the amount of funds it wants to deposit. 
C)  the need to loan money to developing nations. 
D)  rules set up by the World Bank. 
A)  its national income. 
B)  the amount of funds it wants to deposit. 
C)  the need to loan money to developing nations. 
D)  rules set up by the World Bank.

Question 12

What is the annual rate of growth of per capita real GDP if real GDP grows at a constant rate of 5 percent per year and the annual rate of population growth is 2 percent?

Accepted Answer

A)  7 percent 
B)  3 percent 
C)  5 percent 
D)  -1 percent 
A)  7 percent 
B)  3 percent 
C)  5 percent 
D)  -1 percent

Question 13

When a nation's currency suddenly loses value, the ________ may step in to buy the afflicted currency.

Accepted Answer

A)  World Bank 
B)  International Monetary Fund 
C)  World Trade Organization 
D)  United Nations 
A)  World Bank 
B)  International Monetary Fund 
C)  World Trade Organization 
D)  United Nations

Question 14

In nondemocratic countries that have experienced consistent economic growth and improvements in their standards of living

Accepted Answer

A)  there is no tendency to become more democratic over time because the current political situation is economically successful. 
B)  political freedom is apt to decrease over time as governments become more controlling. 
C)  the rise of special-interest groups usually promotes competition and growth. 
D)  there is a tendency to become democratic over time. 
A)  there is no tendency to become more democratic over time because the current political situation is economically successful. 
B)  political freedom is apt to decrease over time as governments become more controlling. 
C)  the rise of special-interest groups usually promotes competition and growth. 
D)  there is a tendency to become democratic over time.

Question 15

The primary function of the International Monetary Fund is

Accepted Answer

A)  to provide loans only to private firms in developing countries. 
B)  to make direct, irrevocable transfers of funds from wealthy nations to poor nations. 
C)  to lend solely on the basis of a nation's relative poverty. 
D)  to make loans aimed at promoting global stability and hence growth. 
A)  to provide loans only to private firms in developing countries. 
B)  to make direct, irrevocable transfers of funds from wealthy nations to poor nations. 
C)  to lend solely on the basis of a nation's relative poverty. 
D)  to make loans aimed at promoting global stability and hence growth.

Question 16

The International Monetary Fund (IMF) is an international organization designed to

Accepted Answer

A)  promote world economic growth by means of greater financial stability. 
B)  promote world economic growth via loans to developed nations. 
C)  circulate a single currency worldwide. 
D)  act as the world's central bank. 
A)  promote world economic growth by means of greater financial stability. 
B)  promote world economic growth via loans to developed nations. 
C)  circulate a single currency worldwide. 
D)  act as the world's central bank.

Question 17

The "currency" of the IMF is the

Accepted Answer

A)  International Currency Unit. 
B)  Special Drawing Right. 
C)  IMF Dollar. 
D)  U.S. dollar. 
A)  International Currency Unit. 
B)  Special Drawing Right. 
C)  IMF Dollar. 
D)  U.S. dollar.

Question 18

Country X has experienced GDP growth of 2 percent and a population growth of 3 percent. What is this country's growth of per capita real GDP?

Accepted Answer

A)  -1 percent 
B)  1 percent 
C)  5 percent 
D)  -5 percent 
A)  -1 percent 
B)  1 percent 
C)  5 percent 
D)  -5 percent

Question 19

When a country has a large amount of dead capital

Accepted Answer

A)  there is too much political freedom. 
B)  there is a large amount of economic growth. 
C)  large amounts of capital will be inefficiently employed. 
D)  a country's exports increase. 
A)  there is too much political freedom. 
B)  there is a large amount of economic growth. 
C)  large amounts of capital will be inefficiently employed. 
D)  a country's exports increase.

Question 20

The adverse selection problem in international investment means

Accepted Answer

A)  that those seeking funds for the riskiest projects are those most actively seeking the funds. 
B)  that the recipients of the funds may use the funds for other than the approved projects. 
C)  that government officials may demand higher than the usual amount of bribes. 
D)  those in the highest levels of government are the most dishonest. 
A)  that those seeking funds for the riskiest projects are those most actively seeking the funds. 
B)  that the recipients of the funds may use the funds for other than the approved projects. 
C)  that government officials may demand higher than the usual amount of bribes. 
D)  those in the highest levels of government are the most dishonest.

Exam 18: Policies and Prospects for Global Economic Growth

Countries with a high level of bureaucratic inefficiency tend to have low rates of real GDP growth because

The World Bank was formed in

The World Bank has extended a loan to Country X to build a new toll road and counts on the repayment of the loan from the collected tolls. After the funds have been transferred to the country, the government decides to spend the money to build a new presidential palace. This is an example of

Assume that in the economy real GDP grows at a constant rate. There has just been a decrease in the rate of growth of the population. This implies that the

The purchase of more than ten percent of the shares of a foreign company is known as a(n)

The largest International Monetary Fund quota subscription, denominated in Special Drawing Rights, is held by

What will happen to the annual rate of growth of per capita real GDP if the annual rate of population growth increases and the annual rate of growth of real GDP goes down?

Adverse selection and moral hazard problems arise when there is

The following are obstacles to international investment EXCEPT

Which of the following is NOT true about dead capital?

To be a member of the Internal Monetary Fund a nation must deposit funds based on

What is the annual rate of growth of per capita real GDP if real GDP grows at a constant rate of 5 percent per year and the annual rate of population growth is 2 percent?

When a nation's currency suddenly loses value, the ________ may step in to buy the afflicted currency.

In nondemocratic countries that have experienced consistent economic growth and improvements in their standards of living

The primary function of the International Monetary Fund is

The International Monetary Fund (IMF) is an international organization designed to

The "currency" of the IMF is the

Country X has experienced GDP growth of 2 percent and a population growth of 3 percent. What is this country's growth of per capita real GDP?

When a country has a large amount of dead capital

The adverse selection problem in international investment means

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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