Question 1

Which of the following is the most likely reason why immigrants in developing countries become entrepreneurs?

Accepted Answer

A) They usually hold government positions. 
B) They are more intelligent than the domestic population. 
C) They are risk-averse. 
D) They have skills and experience that are lacking in poor nations. 
E) They quickly assimilate to their new environment. 
A) They usually hold government positions. 
B) They are more intelligent than the domestic population. 
C) They are risk-averse. 
D) They have skills and experience that are lacking in poor nations. 
E) They quickly assimilate to their new environment.

Question 2

The reason why public subsidization of industries in less-developed countries tends to result in slow economic growth is that:

Accepted Answer

A) when companies face no competition, there is no incentive for them to improve their production. 
B) too much of the taxpayer's money is spent in these programs. 
C) consumers tend to develop an aversion to buying subsidized goods and services. 
D) subsidies tend to create too much competition for products. 
E) subsidization creates shortage in the product market. 
A) when companies face no competition, there is no incentive for them to improve their production. 
B) too much of the taxpayer's money is spent in these programs. 
C) consumers tend to develop an aversion to buying subsidized goods and services. 
D) subsidies tend to create too much competition for products. 
E) subsidization creates shortage in the product market.

Question 3

Which of the following is a likely benefit of foreign investment in a developing country?

Accepted Answer

A) Domestic firms are subjected to foreign competition 
B) Labor-intensive industries grow quickly 
C) New technology is adapted 
D) The natural rate of unemployment falls to zero 
E) The rate of inflation declines 
A) Domestic firms are subjected to foreign competition 
B) Labor-intensive industries grow quickly 
C) New technology is adapted 
D) The natural rate of unemployment falls to zero 
E) The rate of inflation declines

Question 4

An inward-oriented strategy is designed to:

Accepted Answer

A) expand a country's export capacity. 
B) increase production of goods in which the domestic economy has an absolute advantage. 
C) develop the domestic manufacturing sector. 
D) eliminate any trade with foreign nations. 
E) improve productivity in the domestic service sector. 
A) expand a country's export capacity. 
B) increase production of goods in which the domestic economy has an absolute advantage. 
C) develop the domestic manufacturing sector. 
D) eliminate any trade with foreign nations. 
E) improve productivity in the domestic service sector.

Question 5

A country is strongly inward-oriented if exports are clearly discouraged by controls to isolate and protect the domestic market.

Accepted Answer

A) True 
 B)False

Question 6

The practice of imposing import restrictions to protect a newly developing domestic economy typically results in:

Accepted Answer

A) a rapid improvement in the standard of living. 
B) expanded trade relations with other nations. 
C) lower prices of domestic products. 
D) allocation of resources away from the primary products. 
E) greater cost efficiency in domestic production. 
A) a rapid improvement in the standard of living. 
B) expanded trade relations with other nations. 
C) lower prices of domestic products. 
D) allocation of resources away from the primary products. 
E) greater cost efficiency in domestic production.

Question 7

A key reason for low foreign direct investment in developing nations is:

Accepted Answer

A) the presence of tariff and non tariff barriers on imports. 
B) the fear of nationalization of private assets. 
C) the lack of government-operated enterprises. 
D) the high interest rate charged on loans. 
E) the fear of falling inflation rates. 
A) the presence of tariff and non tariff barriers on imports. 
B) the fear of nationalization of private assets. 
C) the lack of government-operated enterprises. 
D) the high interest rate charged on loans. 
E) the fear of falling inflation rates.

Question 8

Which of the following is not a probable consequence of food aid to developing countries?

Accepted Answer

A) Increased domestic food prices 
B) Declining domestic output 
C) Misallocation of food supplies 
D) Increased dependency on foreign food supplies 
E) Increased starvation of the needy 
A) Increased domestic food prices 
B) Declining domestic output 
C) Misallocation of food supplies 
D) Increased dependency on foreign food supplies 
E) Increased starvation of the needy

Question 9

The primary objective of inward-oriented strategies is:

Accepted Answer

A) to raise government revenue through tariffs and other import taxes. 
B) to lower the domestic price of imports. 
C) to replace imported manufactured goods with domestic goods. 
D) to encourage imports through reduction of tariff and non-tariff barriers. 
E) to encourage the production of those goods in which the country has a comparative advantage. 
A) to raise government revenue through tariffs and other import taxes. 
B) to lower the domestic price of imports. 
C) to replace imported manufactured goods with domestic goods. 
D) to encourage imports through reduction of tariff and non-tariff barriers. 
E) to encourage the production of those goods in which the country has a comparative advantage.

Question 10

Which of the following is a basic human need?

Accepted Answer

A) Transportation 
B) Healthcare 
C) Money for gas 
D) College level education 
E) Savings 
A) Transportation 
B) Healthcare 
C) Money for gas 
D) College level education 
E) Savings

Question 11

What is the main reason why import-substitution strategies fail to generate rapid economic growth?

Accepted Answer

A) Deteriorating terms of trade 
B) Scarce natural resources 
C) Inefficient allocation of resources 
D) Lack of self-interested behavior by entrepreneurs 
E) Insufficient subsidies to domestic producers 
A) Deteriorating terms of trade 
B) Scarce natural resources 
C) Inefficient allocation of resources 
D) Lack of self-interested behavior by entrepreneurs 
E) Insufficient subsidies to domestic producers

Question 12

The predominant source of multilateral aid is:

Accepted Answer

A) the European Community 
B) the United Nations 
C) the Agency for International Development 
D) the World Bank 
E) the British government 
A) the European Community 
B) the United Nations 
C) the Agency for International Development 
D) the World Bank 
E) the British government

Question 13

International trade financing is dominated by:

Accepted Answer

A) the U.S.Agency for International Development. 
B) private export-import agencies. 
C) the World Bank. 
D) the IMF. 
E) commercial bank syndicates. 
A) the U.S.Agency for International Development. 
B) private export-import agencies. 
C) the World Bank. 
D) the IMF. 
E) commercial bank syndicates.

Question 14

Which of the following is the common link among developing countries?

Accepted Answer

A) High inflation 
B) Low unemployment 
C) Low trade deficits 
D) Minimum government interference 
E) Low per capita GDP 
A) High inflation 
B) Low unemployment 
C) Low trade deficits 
D) Minimum government interference 
E) Low per capita GDP

Question 15

Quotas are designed to:

Accepted Answer

A) restrict export of domestic goods to foreign markets. 
B) protect domestic producers from higher sales taxes. 
C) increase foreign demand for domestic products. 
D) increase domestic demand for foreign products. 
E) protect domestic producers from foreign competition. 
A) restrict export of domestic goods to foreign markets. 
B) protect domestic producers from higher sales taxes. 
C) increase foreign demand for domestic products. 
D) increase domestic demand for foreign products. 
E) protect domestic producers from foreign competition.

Question 16

Foreign direct investment includes portfolio investment.

Accepted Answer

A) True 
 B)False

Question 17

Entrepreneurs are more likely to develop among minority groups that have been blocked from traditional high-paying jobs.

Accepted Answer

A) True 
 B)False

Question 18

South Korea used an inward-oriented development strategy to focus on the growth of exports.

Accepted Answer

A) True 
 B)False

Question 19

A country is strongly outward-oriented if there is less or no control on international trade.

Accepted Answer

A) True 
 B)False

Question 20

Higher per capita GNP always means higher quality of life.

Accepted Answer

A) True 
 B)False

Exam 29: Development Economics

Which of the following is the most likely reason why immigrants in developing countries become entrepreneurs?

The reason why public subsidization of industries in less-developed countries tends to result in slow economic growth is that:

Which of the following is a likely benefit of foreign investment in a developing country?

An inward-oriented strategy is designed to:

A country is strongly inward-oriented if exports are clearly discouraged by controls to isolate and protect the domestic market.

The practice of imposing import restrictions to protect a newly developing domestic economy typically results in:

A key reason for low foreign direct investment in developing nations is:

Which of the following is not a probable consequence of food aid to developing countries?

The primary objective of inward-oriented strategies is:

Which of the following is a basic human need?

What is the main reason why import-substitution strategies fail to generate rapid economic growth?

The predominant source of multilateral aid is:

International trade financing is dominated by:

Which of the following is the common link among developing countries?

Quotas are designed to:

Foreign direct investment includes portfolio investment.

Entrepreneurs are more likely to develop among minority groups that have been blocked from traditional high-paying jobs.

South Korea used an inward-oriented development strategy to focus on the growth of exports.

A country is strongly outward-oriented if there is less or no control on international trade.

Higher per capita GNP always means higher quality of life.

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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