Question 1

The creation of an adequate infrastructure in a nation is primarily the responsibility of the public sector.

Accepted Answer

A) True 
 B)False

Question 2

Brazil, Russia, and Thailand are referred to as:

Accepted Answer

A)   Industrially advanced countries
B)   Middle-income developing countries
C)   Low-income developing countries
D)   Command economiesE) None of the above
F) A) and B)

Question 3

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Accepted Answer

A) True 
 B)False

Question 4

Microfinance refers to:

Accepted Answer

A)   Small-size stock markets with very limited capitalization
B)   A system of providing credit to small-business owners
C)   Bond markets for governments of small nations
D)   Deposits in small banks in developing nationsE) A) and C)
F) None of the above

Question 5

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-sufficientE) All of the above
F) C) and D)

Question 6

The average per capita income in 2010 for low-income developing nations was:

Accepted Answer

A)   $580
B)   $2,100
C)   $1,240
D)   $4,600E) C) and D)
F) A) and D)

Question 7

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 flowsE) A) and B)
F) A) and C)

Question 8

Which of the following is a recommended policy for industrially advanced countries to adopt to foster economic growth in DVCs?

Accepted Answer

A)   Admitting more temporary workers from DVCs
B)   Reducing the amount of debt relief for DVCs to make them less dependent
C)   Eliminating loans from the World Bank because it encourages bureaucracy
D)   Eliminating financial control of central banks where they have been establishedE) A) and C)
F) B) and C)

Question 9

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 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 which increases macroeconomic stability
D)   A lack of entrepreneurial talent that limits the formation of businesses and the development of private businessesE) All of the above
F) B) and D)

Question 11

Saving is a larger percentage of domestic output in DVCs than in IACs, but the saving is put to poor use.

Accepted Answer

A) True 
 B)False

Question 12

Which organization primarily makes and guarantees loans to developing nations for basic development projects such as the construction of dams, roads, and schools?

Accepted Answer

A)   The World Bank
B)   The New Economic Order
C)   The Federal Reserve System
D)   The Committee on Economic DevelopmentE) C) and D)
F) A) and B)

Question 13

The average annual rate of population increase in the Philippines from 2000 to 2010 was about 2 percent. Based on this rate of growth, the population of the Philippines will double in about:

Accepted Answer

A)   7 years
B)   11 years
C)   35 years
D)   46 yearsE) A) and B)
F) B) and D)

Question 14

Which of the following is most characteristic of developing nations?

Accepted Answer

A)   A small percentage of the labor force in agriculture
B)   A relatively equitable distribution of income
C)   Low levels of labor productivity
D)   Low rates of population growthE) A) and C)
F) A) and B)

Question 15

A developing nation may not experience an increase in the average standard of living even if it increases its output of goods and services because of:

Accepted Answer

A)   Land reform
B)   Population growth
C)   Underemployment and disguised unemployment
D)   Capital-saving technologyE) All of the above
F) B) and D)

Question 16

The population growth rate of the DVCs (developing countries)  as a group in recent decades has been:

Accepted Answer

A)   Steady
B)   Declining
C)   Rising modestly
D)   Rising rapidlyE) A) and B)
F) None of the above

Question 17

Some of the ways that industrially advanced countries (IACs)  can help developing countries (DVCs)  in achieving faster economic growth include the following, except:

Accepted Answer

A)   Expanding trade
B)   Admitting in more temporary workers
C)   Subsidizing their own agricultural sectors
D)   Discouraging arms salesE) None of the above
F) B) and C)

Question 18

Microfinance can help directly support:

Accepted Answer

A)   Labor or workers
B)   Local governments
C)   Entrepreneurs
D)   ConsumersE) A) and B)
F) A) and C)

Question 19

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 it be supporting?

Accepted Answer

A)   Traditional view
B)   Peasant agriculture view
C)   The will-to-develop view
D)   Demographic transition viewE) B) and C)
F) All of the above

Question 20

Which of the following would most help a developing country (DVC)  break out of the vicious circle of poverty?

Accepted Answer

A)   More consumption
B)   More food production
C)   An increase in the birth rate
D)   An increase in labor productivityE) None of the above
F) A) and B)

Exam 22: The Economics of Developing Countries

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:

Correct AnswerverifiedShow Answer

Saving is a larger percentage of domestic output in DVCs than in IACs, but the saving is put to poor use.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Microfinance refers to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which organization primarily makes and guarantees loans to developing nations for basic development projects such as the construction of dams, roads, and schools?

Correct AnswerverifiedShow Answer

The average annual rate of population increase in the Philippines from 2000 to 2010 was about 2 percent. Based on this rate of growth, the population of the Philippines will double in about:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Which of the following is a recommended policy for industrially advanced countries to adopt to foster economic growth in DVCs?

Correct AnswerverifiedShow Answer

The average per capita income in 2010 for low-income developing nations was:

Correct AnswerverifiedShow Answer

The creation of an adequate infrastructure in a nation is primarily the responsibility of the public sector.

Correct AnswerverifiedShow Answer

Brazil, Russia, and Thailand are referred to as:

Correct AnswerverifiedShow Answer

The population growth rate of the DVCs (developing countries) as a group in recent decades has been:

Correct AnswerverifiedShow Answer

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Correct AnswerverifiedShow Answer

Some of the ways that industrially advanced countries (IACs) can help developing countries (DVCs) in achieving faster economic growth include the following, except:

Correct AnswerverifiedShow Answer

Which of the following is most characteristic of developing nations?

Correct AnswerverifiedShow Answer

A developing nation may not experience an increase in the average standard of living even if it increases its output of goods and services because of:

Correct AnswerverifiedShow Answer

Which of the following would most help a developing country (DVC) break out of the vicious circle of poverty?

Correct AnswerverifiedShow Answer

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 it be supporting?

Correct AnswerverifiedShow Answer

Microfinance can help directly support:

Correct AnswerverifiedShow Answer

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