Question 1

Capital ﬂight from DVCs (developing countries) tends to offset much of the foreign loans and aid
that they receive from IACs (industrially advanced countries).

Accepted Answer

A) True 
 B)False

Question 2

A large portion of foreign aid from IACs to DVCs is provided on the basis of

Accepted Answer

A)   economic considerations.
B)   geographical considerations.
C)   humanitarian considerations.
D)   political and military considerations.E) A) and D)
F) A) and B)

Question 3

(Consider This)  The World Bank deﬁnes extreme poverty as

Accepted Answer

A)   living on $1.90 per day or less.
B)   living on less than $19 a day.
C)   living without health care and safe water but with adequate food and education.
D)   living on less than $0.19 per day.E) A) and D)
F) B) and C)

Question 4

Because families can afford to have more children, population growth is greater in the IACs than in
the DVCs.

Accepted Answer

A) True 
 B)False

Question 5

When technological advances are of the capital-using kind, it is possible for an economy to increase
its productivity without any net investment in capital goods.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a characteristic of human resources in the poorest DVCs?

Accepted Answer

A)   Populations are large.
B)   Unemployment and underemployment are widespread.
C)   Population growth is low.
D)   Labor productivity is low.E) A) and B)
F) All of the above

Question 7

In recent decades,

Accepted Answer

A)   all countries classiﬁed as DVCs have had little or no economic growth.
B)   some nations classiﬁed as DVCs have grown rapidly, while others have grown very slowly or not at all.
C)   all countries classiﬁed as DVCs have experienced rapid economic growth and rising living standards.
D)   all countries classiﬁed as low-income DVCs have had declining per capita GDPs.E) C) and D)
F) B) and D)

Question 8

The absolute income gap between the IACs and the DVCs has

Accepted Answer

A)   remained constant over time.
B)   increased over time.
C)   decreased over time.
D)   increased in nominal terms but decreased in real terms.E) A) and D)
F) None of the above

Question 9

What is the World Bank? What is its major objective?

Accepted Answer

The World Bank is a bank that lends (and...

Question 10

The "vicious circle of poverty" for developing nations can best be described by

Accepted Answer

A)   low levels of international trade that reduce exports and increase the dependence on imports.
B)   low incomes that inhibit saving and the accumulation of real and human capital, making it diﬃcult to increase productivity and income.
C)   a large government sector, which reduces the availability of private investment spending but increases macroeconomic stability.
D)   a lack of entrepreneurial talent that limits the formation of businesses and the development of private businesses.E) A) and D)
F) A) and C)

Question 11

Population expansion can impede economic development for the following reasons except

Accepted Answer

A)   reduced saving and investment rates.
B)   reduced productivity of labor.
C)   a larger supply of labor.
D)   its contribution to urban congestion and problems.E) B) and D)
F) All of the above

Question 12

Which of the following would be an example of direct foreign investment in DVCs?

Accepted Answer

A)   a grant from the World Bank to build an irrigation project in Kenya
B)   the ﬁnancing of a new chemical plant in Peru by a German company
C)   a low-interest loan from the U.S. government to Turkey to purchase military hardware
D)   a loan from the Japanese government to the Indonesian government to pay for electronic equipmentE) A) and D)
F) A) and C)

Question 13

(Last Word)  Loans offered through microcredit programs

Accepted Answer

A)   are usually spent on food.
B)   suffer from low repayment rates.
C)   have very high repayment rates.
D)   have lifted borrowers out of poverty at a faster pace than nonrecipients of loans.E) B) and C)
F) None of the above

Question 14

The demographic transition view alleges that

Accepted Answer

A)   the DVCs must ﬁrst accept the use of birth control techniques to increase their standards of living.
B)   population growth will decline only if mortality rates exceed birth rates.
C)   if incomes ﬁrst rise, population growth will then decline.
D)   population growth has no bearing on a nation's per capita income.E) A) and C)
F) B) and D)

Question 15

(Last Word)  Early experiments with unconditional cash transfers have revealed that

Accepted Answer

A)   most of these cash transfers are repaid within a very short time.
B)   although the money is usually spent on education and capital, cultural obstacles generally prevent this spending from translating into long-term earnings gains.
C)   a majority of recipients use the money for training and equipment that results in a higher long-term income.
D)   most recipients spend the money on current consumption and realize no long-term gain in earning power.E) A) and D)
F) A) and C)

Question 16

The exports of the DVCs consist largely of

Accepted Answer

A)   high-technology goods.
B)   raw materials and farm products.
C)   manufactured goods.
D)   services and ﬁnancial capital.E) A) and B)
F) None of the above

Question 17

Many of the major projects of the World Bank have been for

Accepted Answer

A)   making loans to private citizens.
B)   building infrastructure in a nation.
C)   supervising the banking system in DVCs.
D)   establishing new tax systems for governments in DVCs.E) None of the above
F) A) and D)

Question 18

What measure of economic development is used most often to classify nations as industrially advanced or as developing?

Accepted Answer

A)   per capita income
B)   life expectancy at birth
C)   per capita energy consumption
D)   daily per capita calorie supplyE) B) and D)
F) None of the above

Question 19

Which of the following includes only examples of industrially advanced countries (IACs) ?

Accepted Answer

A)   the United States, Canada, and Mexico
B)   Pakistan, India, and China
C)   Japan, South Korea, and China
D)   Canada, Australia, and New ZealandE) All of the above
F) B) and C)

Question 20

Assume that the real output of a developing nation increases from $120 billion to $140 billion, while its population expands from 100 to 110 million. As a result, real income per capita has increased by
About

Accepted Answer

A)   $56 per person.
B)   $64 per person.
C)   $72 per person.
D)   $88 per person.E) A) and D)
F) All of the above

Exam 22: The Economics of Developing Countries

The demographic transition view alleges that

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The "vicious circle of poverty" for developing nations can best be described by

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Many of the major projects of the World Bank have been for

Correct AnswerverifiedShow Answer

Assume that the real output of a developing nation increases from $120 billion to $140 billion, while its population expands from 100 to 110 million. As a result, real income per capita has increased by About

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Because families can afford to have more children, population growth is greater in the IACs than in the DVCs.

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Capital ﬂight from DVCs (developing countries) tends to offset much of the foreign loans and aid that they receive from IACs (industrially advanced countries).

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of human resources in the poorest DVCs?

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Which of the following includes only examples of industrially advanced countries (IACs) ?

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A large portion of foreign aid from IACs to DVCs is provided on the basis of

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Population expansion can impede economic development for the following reasons except

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What measure of economic development is used most often to classify nations as industrially advanced or as developing?

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When technological advances are of the capital-using kind, it is possible for an economy to increase its productivity without any net investment in capital goods.

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In recent decades,

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The absolute income gap between the IACs and the DVCs has

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Which of the following would be an example of direct foreign investment in DVCs?

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(Consider This) The World Bank deﬁnes extreme poverty as

Correct AnswerverifiedShow Answer

The exports of the DVCs consist largely of

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(Last Word) Loans offered through microcredit programs

Correct AnswerverifiedShow Answer

What is the World Bank? What is its major objective?

Correct AnswerverifiedThe World Bank is a bank that lends (and...View AnswerShow Answer

(Last Word) Early experiments with unconditional cash transfers have revealed that

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The World Bank is a bank that lends (and...
View Answer

Correct Answer
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