Question 1

Government can play a major positive role in the early stage of economic development by

Accepted Answer

A) providing an adequate infrastructure. 
B) establishing price controls for products. 
C) promoting exports by subsidizing them. 
D) creating marketing boards for export products.

Question 2

State industries are notoriously poor "incubators" for the development of profit-focused, entrepreneurial persons who may leave the firm to set up their own businesses.This statement is an argument in favor of

Accepted Answer

A) free immigration and emigration. 
B) privatizing state industries. 
C) central planning. 
D) free trade.

Question 3

Which attitude or custom is the most conducive to long-term economic growth?

Accepted Answer

A) a focus on group contentment rather than individual achievement 
B) the belief that there is little or no correlation between an individual's economic actions and her or his economic fortunes 
C) the belief that there is a direct connection between individual efforts (including educational efforts) and economic rewards 
D) the use of the majority of resources for religious structures and ceremonies

Question 4

Birth- and population-control efforts in many DVCs (developing countries) face the following obstacles except

Accepted Answer

A) low literacy rates. 
B) religious reasons. 
C) a peasant agriculture view about children. 
D) government authorities.

Question 5

A study concludes that in DVCs, rising incomes must first be achieved and only then will there be slower population growth.What view of DVC population growth would this study be supporting?

Accepted Answer

A) traditional view 
B) peasant agriculture view 
C) the will-to-develop view 
D) demographic transition view

Question 6

Which of the following nations is not considered an industrially advanced country?

Accepted Answer

A) Russia 
B) Japan 
C) Canada 
D) Australia

Question 7

Over the next 15 years, out of every 10 people added to the world's population will be born in developing countries.

Accepted Answer

A) 6 
B) 7 
C) 8 
D) 9

Question 8

If a local leader in a developing nation claims that there is little or no correlation between a person's efforts and the economic rewards that are given to that person, this leader is most likely expressing a

Accepted Answer

A) description of the vicious cycle of poverty. 
B) theory of exploitation and dependence. 
C) capricious view of the universe. 
D) rationale for neocolonialism.

Question 9

A recommended policy for DVCs to implement that promotes economic growth is

Accepted Answer

A) establishing realistic policies for exchange rates. 
B) obtaining more low-interest loans from the U.S.government. 
C) encouraging more tariffs and quotas to protect DVC businesses. 
D) discouraging direct foreign investment to make DVCs more self-sufficient.

Question 10

The World Bank

Accepted Answer

A) provides military assistance to those nations interested in improving national defense. 
B) makes and guarantees loans for basic development projects such as the construction of dams, roads, and schools. 
C) provides gold for DVCs that want to go on the gold standard. 
D) provides short-term loans to DVCs that are incurring balance of payments deficits.

Question 11

Population growth remains high in most DVCs

Accepted Answer

A) because religious and sociocultural considerations favor large families. 
B) because children may provide economic security for aging parents. 
C) because children provide agricultural labor in rural areas. 
D) for all of these reasons.

Question 12

If it is cheaper in the long run to use a new metal plow that lasts a long time than an inferior wooden plow that needs to be replaced often, then this is an example of

Accepted Answer

A) a capital-using technology. 
B) a capital-saving technology. 
C) capital consumption. 
D) private capital flows.

Question 13

All developing countries suffer from a critical shortage of

Accepted Answer

A) land. 
B) population. 
C) capital goods. 
D) government regulation.

Question 14

Rapid population growth can be an obstacle to economic development

Accepted Answer

A) because it can translate a relatively large increase in real output into a small increase in real output per capita. 
B) because more investment will be required to simply maintain the quantity of capital goods per person. 
C) because it may lead to the overutilization and therefore ecological degradation of farmland. 
D) for all of these reasons.

Question 15

Capital flight is a problem facing DVCs that involves the

Accepted Answer

A) difficulty of sustaining skilled workers in the government sector of the DVC economies. 
B) transfer of private savings from DVCs to IACs. 
C) flight of agricultural workers from rural to urban areas, especially capital cities, to take advantage of better job opportunities. 
D) movement of capital goods from IACs to DVCs to avoid taxes.

Question 16

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

Accepted Answer

A) the use of capital-saving technology 
B) development of natural resources 
C) widespread political corruption 
D) an increase in foreign aid

Question 17

Income gains in the poorest DVCs may increase population growth initially, at least for a while, due to the following reasons except

Accepted Answer

A) declining death rates 
B) increasing birth rates 
C) reduced infant mortality 
D) decreasing life expectancy

Question 18

Which of the following is generally not an effective strategy to promote DVC growth?

Accepted Answer

A) microlending 
B) human capital development 
C) fighting wars against neighbors to obtain resources and stimulate aggregate demand through arms spending 
D) controlling inflation

Question 19

The average per capita income in 2014 for low-income developing nations was about

Accepted Answer

A) $630. 
B) $2,100. 
C) $1,240. 
D) $4,600.

Question 20

Which of the following DVC policies is not likely to increase DVC economic growth?

Accepted Answer

A) privatizing state industries 
B) controlling population growth 
C) restricting direct foreign investment from abroad 
D) building human capital

Exam 42: The Economics of Developing Countries