Question 1

Per capita GNP and quality-of-life are the only ways to determine a country's level of economic development.

Accepted Answer

A) True 
 B)False

Question 2

A dual economy is characterized by:

Accepted Answer

A) rapid productivity growth in both the agricultural sector and the manufacturing sector. 
B) uneven development trends in two economic sectors. 
C) drastic differences in regional work ethics. 
D) the nonexistence of the government and foreign trade sectors. 
E) a manufacturing sector that does not depend on natural resource supplies for production. 
A) rapid productivity growth in both the agricultural sector and the manufacturing sector. 
B) uneven development trends in two economic sectors. 
C) drastic differences in regional work ethics. 
D) the nonexistence of the government and foreign trade sectors. 
E) a manufacturing sector that does not depend on natural resource supplies for production.

Question 3

If rapid population growth reduces the amount of capital per worker, thereby lowering labor productivity, it is referred to as:

Accepted Answer

A) age dependency. 
B) capital budgeting. 
C) investment diversion. 
D) capital disinvestment. 
E) capital shallowing. 
A) age dependency. 
B) capital budgeting. 
C) investment diversion. 
D) capital disinvestment. 
E) capital shallowing.

Question 4

Which of the following isa primary product?

Accepted Answer

A) Tomato sauce 
B) Chocolate bars 
C) Salt 
D) Breakfast cereal 
E) A desk 
A) Tomato sauce 
B) Chocolate bars 
C) Salt 
D) Breakfast cereal 
E) A desk

Question 5

What is a trade credit?

Accepted Answer

A) A credit card purchase 
B) A government loan for exporters 
C) The extension of a period of time before which an importer must pay for goods and services purchased 
D) An IMF loan to meet trade deficit and liabilities for hard currencies 
E) The time it takes for franchisees to pay for the products they obtain from the main franchiser 
A) A credit card purchase 
B) A government loan for exporters 
C) The extension of a period of time before which an importer must pay for goods and services purchased 
D) An IMF loan to meet trade deficit and liabilities for hard currencies 
E) The time it takes for franchisees to pay for the products they obtain from the main franchiser

Question 6

Which of the following is true of import-substitution strategies?

Accepted Answer

A) They generally focus on specialization based on comparative advantage. 
B) They dominate the strategies of the developed world. 
C) They focus on the production of exportable. 
D) These strategies lower the price of the domestically produced goods than the imported goods. 
E) They generally require the removal of import barriers like tariffs or quotas. 
A) They generally focus on specialization based on comparative advantage. 
B) They dominate the strategies of the developed world. 
C) They focus on the production of exportable. 
D) These strategies lower the price of the domestically produced goods than the imported goods. 
E) They generally require the removal of import barriers like tariffs or quotas.

Question 7

Which of the following is a common argument against allowing a foreign firm to operate a business in a developing country?

Accepted Answer

A) The foreign firm may gain control over national resources. 
B) Foreign productive expertise may outdistance domestic labor skills. 
C) The foreign firm may increase domestic competition. 
D) Technology may be transferred from industrial countries. 
E) The foreign firm may reduce dependency on domestic imports. 
A) The foreign firm may gain control over national resources. 
B) Foreign productive expertise may outdistance domestic labor skills. 
C) The foreign firm may increase domestic competition. 
D) Technology may be transferred from industrial countries. 
E) The foreign firm may reduce dependency on domestic imports.

Question 8

Import quotas are aimed at increasing the quality of domestic products.

Accepted Answer

A) True 
 B)False

Question 9

A product in the first stage of production is defined as a(n):

Accepted Answer

A) basic need. 
B) investment. 
C) environmental product. 
D) primary product. 
E) transitory product 
A) basic need. 
B) investment. 
C) environmental product. 
D) primary product. 
E) transitory product

Question 10

As of 2010, the World Bank classified a country as a low-income economy when its domestic per capita GDP fell below _____.

Accepted Answer

A) $1000 
B) $995 
C) $675 
D) $530 
E) $475 
A) $1000 
B) $995 
C) $675 
D) $530 
E) $475

Question 11

Investment diversion is considered an obstacle to economic growth because:

Accepted Answer

A) it would be better to increase the mortality rate of the country, and thus have a higher per capita real GDP. 
B) investment in health care is highly appreciated by the international community. 
C) capital infrastructure automatically eliminates population problems. 
D) the investments in health care affect only the poorest, the least productive inhabitants of a country. 
E) with no investment in infrastructure, there is no way for a country to build its industries. 
A) it would be better to increase the mortality rate of the country, and thus have a higher per capita real GDP. 
B) investment in health care is highly appreciated by the international community. 
C) capital infrastructure automatically eliminates population problems. 
D) the investments in health care affect only the poorest, the least productive inhabitants of a country. 
E) with no investment in infrastructure, there is no way for a country to build its industries.

Question 12

Foreign aid that flows from one country to another is called multilateral aid.

Accepted Answer

A) True 
 B)False

Question 13

Mexico and India have a fairly large number of engineers and technical personnel, which means that new technology can be adapted relatively quickly.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not an argument in favor of inward-oriented strategies?

Accepted Answer

A) A newly developing economy needs protection from foreign competition. 
B) Government restrictions are necessary to maximize the rate of economic growth. 
C) Deteriorating prices of primary products in relation to manufactured goods expose developing countries to increasingly unfavorable terms of trade. 
D) Developing countries should compete on the basis of comparative advantage. 
E) Economic growth requires rapid industrialization and a shift away from primary products. 
A) A newly developing economy needs protection from foreign competition. 
B) Government restrictions are necessary to maximize the rate of economic growth. 
C) Deteriorating prices of primary products in relation to manufactured goods expose developing countries to increasingly unfavorable terms of trade. 
D) Developing countries should compete on the basis of comparative advantage. 
E) Economic growth requires rapid industrialization and a shift away from primary products.

Question 15

Which of the following is an example of a bilateral aid?

Accepted Answer

A) A U.S.commercial bank loan to a Mexican investor 
B) The establishment of a Brazilian subsidiary by a German firm 
C) U.S.humanitarian aid to Somalia 
D) A trade credit extended to Morocco for the purchase of Iranian oil 
E) A World Bank loan to Kenya 
A) A U.S.commercial bank loan to a Mexican investor 
B) The establishment of a Brazilian subsidiary by a German firm 
C) U.S.humanitarian aid to Somalia 
D) A trade credit extended to Morocco for the purchase of Iranian oil 
E) A World Bank loan to Kenya

Question 16

Proponents of inward-oriented policies ignore the fact that natural resources are exhaustible, so their long-run market value will fall.

Accepted Answer

A) True 
 B)False

Question 17

It is generally true that per capita GNP is:

Accepted Answer

A) negatively correlated with labor productivity. 
B) positively correlated with the standard of living. 
C) negatively correlated with the life expectancy rate. 
D) uncorrelated with the literacy level. 
E) positively correlated with the rate of population growth. 
A) negatively correlated with labor productivity. 
B) positively correlated with the standard of living. 
C) negatively correlated with the life expectancy rate. 
D) uncorrelated with the literacy level. 
E) positively correlated with the rate of population growth.

Question 18

The existence of dual economies supports the argument for _____.

Accepted Answer

A) developing domestic exports 
B) reducing quotas on foreign goods 
C) a more active monetary policy 
D) the free movement of resources 
E) imposing trade restrictions 
A) developing domestic exports 
B) reducing quotas on foreign goods 
C) a more active monetary policy 
D) the free movement of resources 
E) imposing trade restrictions

Question 19

In absolute terms, poverty is measured as:

Accepted Answer

A) an index number on the quality-of-life index. 
B) the ratio of family income to family size. 
C) a specific value of family food consumption. 
D) the ratio of total population to national income. 
E) a specific value of per capita GNP. 
A) an index number on the quality-of-life index. 
B) the ratio of family income to family size. 
C) a specific value of family food consumption. 
D) the ratio of total population to national income. 
E) a specific value of per capita GNP.

Question 20

Capital shallowing occurs because old capital depreciates, or becomes completely obsolete with the passage of time.

Accepted Answer

A) True 
 B)False

Exam 29: Development Economics

Per capita GNP and quality-of-life are the only ways to determine a country's level of economic development.

A dual economy is characterized by:

If rapid population growth reduces the amount of capital per worker, thereby lowering labor productivity, it is referred to as:

Which of the following isa primary product?

What is a trade credit?

Which of the following is true of import-substitution strategies?

Which of the following is a common argument against allowing a foreign firm to operate a business in a developing country?

Import quotas are aimed at increasing the quality of domestic products.

A product in the first stage of production is defined as a(n):

As of 2010, the World Bank classified a country as a low-income economy when its domestic per capita GDP fell below _____.

Investment diversion is considered an obstacle to economic growth because:

Foreign aid that flows from one country to another is called multilateral aid.

Mexico and India have a fairly large number of engineers and technical personnel, which means that new technology can be adapted relatively quickly.

Which of the following is not an argument in favor of inward-oriented strategies?

Which of the following is an example of a bilateral aid?

Proponents of inward-oriented policies ignore the fact that natural resources are exhaustible, so their long-run market value will fall.

It is generally true that per capita GNP is:

The existence of dual economies supports the argument for _____.

In absolute terms, poverty is measured as:

Capital shallowing occurs because old capital depreciates, or becomes completely obsolete with the passage of time.

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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