Question 1

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) B) and C)
F) None of the above

Question 2

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 3

Which of the following is a major obstacle to economic growth in DVCs?

Accepted Answer

A)  a fall in population growth
B)  a decline in demographic transition
C)  the low demand for natural resources
D)  the low supply of savingE) B) and C)
F) A) and C)

Question 4

Examples of low-income developing countries are

Accepted Answer

A)  Switzerland, New Zealand, and Australia.
B)  Germany, Austria, and Italy.
C)  Chad, Bangladesh, and Ethiopia.
D)  Mexico, South Korea, and Brazil.E) None of the above
F) A) and B)

Question 5

A reason for placing special emphasis on capital accumulation in developing countries is the high

Accepted Answer

A)  level of adult illiteracy.
B)  productivity of workers in DVCs.
C)  marginal benefits of capital goods.
D)  level of import quotas and tariffs.E) All of the above
F) C) and D)

Question 6

Capital flight refers to

Accepted Answer

A)  the tendency of large corporations of IACs to build new plants in the DVCs because labor is cheaper.
B)  DVC citizens accumulating or investing their savings in the IACs.
C)  the high international mobility of speculative funds caused by variations in exchange rates.
D)  the tendency of DVCs to overinvest in commercial aircraft.E) None of the above
F) B) and C)

Question 7

To stimulate economic growth, it would be best if developing countries adopted policies to

Accepted Answer

A)  discourage foreign investment.
B)  subsidize state industries.
C)  build more human capital.
D)  increase population growth.E) A) and B)
F) A) and C)

Question 8

Which of the given nations would be low-income developing countries (DVCs) , according to the World Bank?

Accepted Answer

A)  country A only
B)  countries A, D, and E
C)  countries A and E
D)  countries A, B, D, and EE) C) and D)
F) A) and C)

Question 9

Approximately what percentage of the world's income is received by the poorest one-fifth of the world's population?

Accepted Answer

A)  2
B)  5
C)  7
D)  10E) B) and C)
F) A) and D)

Question 10

(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 B)
F) C) and D)

Question 11

Saving is low in many DVCs primarily because income is very equally distributed.

Accepted Answer

A) True 
 B)False

Question 12

A recommended policy for developing countries to stimulate economic growth would be

Accepted Answer

A)  abolishing central banks.
B)  more central planning by government.
C)  encouraging more direct foreign investment.
D)  expanding employment in state industries.E) All of the above
F) B) and C)

Question 13

Economic growth may hinge on whether individuals and institutions within a nation want growth badly enough to change their traditional ways of doing things.This statement refers to

Accepted Answer

A)  in-kind investment.
B)  the capricious universe view.
C)  human capital investment.
D)  the will to develop.E) A) and B)
F) A) and C)

Question 14

When economists refer to capital flight, they are speaking of an

Accepted Answer

A)  outflow of financial capital from a certain country.
B)  outflow of real capital from a certain country.
C)  outflow of financial and real capital from a certain country.
D)  outflow of human capital from a certain country.E) A) and C)
F) B) and D)

Question 15

Most of the DVCs find it difficult to accumulate capital goods because

Accepted Answer

A)  the terms of trade prohibit the inflow of private capital from the advanced nations.
B)  it is very difficult to restrict consumption and thus to free resources for capital goods production.
C)  domestic monetary policies designed to achieve price stability result in low interest rates, thereby discouraging investment.
D)  investment is interest inelastic in DVCs.E) A) and B)
F) B) and C)

Question 16

Over the next 15 years, roughly what percentage of the increase in world population will come from DVCs?

Accepted Answer

A)  25 percent
B)  50 percent
C)  70 percent
D)  90 percentE) A) and B)
F) A) and C)

Question 17

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)  politico-military considerations.E) B) and D)
F) None of the above

Question 18

Which of the following statements is correct?

Accepted Answer

A)  Saving is high in less-developed nations because the opportunities for consumption are limited.
B)  For developing nations, the annual rate of population increase is about 5 percent.
C)  Most of the labor forces of developing nations are engaged in light industrial production.
D)  Investment is low in developing nations, making it difficult to increase productivity and incomes.E) None of the above
F) B) and C)

Question 19

One common measure of the "standard of living" in a nation is

Accepted Answer

A)  per capita real income.
B)  unemployment rate.
C)  real GDP.
D)  population size.E) A) and C)
F) A) and D)

Question 20

Based on population and economic development trends, the world population is expected to in the last part of this century.

Accepted Answer

A)  explode
B)  increase mildly
C)  become stable and constant
D)  declineE) None of the above
F) B) and C)

Exam 19: The Economics of Developing Countries

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

Correct AnswerverifiedShow Answer

Over the next 15 years, roughly what percentage of the increase in world population will come from DVCs?

Correct AnswerverifiedShow Answer

Based on population and economic development trends, the world population is expected to in the last part of this century.

Correct AnswerverifiedShow Answer

Economic growth may hinge on whether individuals and institutions within a nation want growth badly enough to change their traditional ways of doing things.This statement refers to

Correct AnswerverifiedShow Answer

Approximately what percentage of the world's income is received by the poorest one-fifth of the world's population?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When economists refer to capital flight, they are speaking of an

Correct AnswerverifiedShow Answer

Which of the given nations would be low-income developing countries (DVCs) , according to the World Bank?

Correct AnswerverifiedShow Answer

Saving is low in many DVCs primarily because income is very equally distributed.

Correct AnswerverifiedShow Answer

Capital flight refers to

Correct AnswerverifiedShow Answer

Which of the following is a major obstacle to economic growth in DVCs?

Correct AnswerverifiedShow Answer

To stimulate economic growth, it would be best if developing countries adopted policies to

Correct AnswerverifiedShow Answer

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

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

One common measure of the "standard of living" in a nation is

Correct AnswerverifiedShow Answer

Most of the DVCs find it difficult to accumulate capital goods because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Examples of low-income developing countries are

Correct AnswerverifiedShow Answer

A reason for placing special emphasis on capital accumulation in developing countries is the high

Correct AnswerverifiedShow Answer

A recommended policy for developing countries to stimulate economic growth would be

Correct AnswerverifiedShow Answer

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