Question 1

An increasing share of the private capital flows to DVCs in recent years has been in the form of

Accepted Answer

A)  interest-free government loans.
B)  educational and training assistance.
C)  direct foreign investment.
D)  bank loans.E) B) and C)
F) A) and D)

Question 2

In recent years, the governments of the IACs have

Accepted Answer

A)  forgiven a portion of the debt owed by some low-income DVCs.
B)  substantially reduced foreign aid to the DVCs.
C)  substantially reduced their contributions to the World Bank.
D)  discouraged skilled DVC workers from emigrating to the IACs.E) A) and D)
F) A) and C)

Question 3

The vicious circle of poverty is based on the connections between low income, low saving, low investment, and low productivity.

Accepted Answer

A) True 
 B)False

Question 4

A major criticism of foreign aid to developing nations is that it

Accepted Answer

A)  provides incentives to reduce the role of government.
B)  is capital-using rather than capital-saving when it is spent.
C)  encourages dependency rather than self-sustained growth.
D)  leads to widespread underemployment and unemployment.E) B) and C)
F) C) and D)

Question 5

Which of the following countries had the best score in the Corruption Perception Index in 2015?

Accepted Answer

A)  Japan
B)  China
C)  United States
D)  CanadaE) A) and B)
F) All of the above

Question 6

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

Question 7

The population growth rate in IACs (industrially advanced countries)  in 2000-2010 averaged 0.7 percent per year.This compares to what percentage growth per year in low- income DVCs (developing countries) ?

Accepted Answer

A)  1.1 percent
B)  2.1 percent
C)  4.0 percent
D)  0.4 percentE) A) and B)
F) A) and D)

Question 8

If the real output of a DVC increases from $200 billion to $260 billion and its population increases from 100 to 120 million, its real per capita output will have

Accepted Answer

A)  remained unchanged.
B)  increased by about $167.
C)  increased by about $55.
D)  decreased by about $20.E) All of the above
F) None of the above

Question 9

The United States in 2014 had about

Accepted Answer

A)  1.8 percent of the world's population and generated about 10 percent of the world's output.
B)  2.4 percent of the world's population and generated about 20 percent of the world's output.
C)  4.4 percent of the world's population and generated about 22 percent of the world's output.
D)  10 percent of the world's population and generated about 30 percent of the world's output.E) C) and D)
F) B) and C)

Question 10

More than 75 percent of the world's income is earned by what percentage of the world's population?

Accepted Answer

A)  5 percent
B)  10 percent
C)  20 percent
D)  40 percentE) C) and D)
F) B) and D)

Question 11

One suggested policy that industrially advanced nations could adopt to foster economic growth in less-developed nations would be to

Accepted Answer

A)  leave the responsibility to the World Bank.
B)  direct foreign aid to the poorest DVCs.
C)  recruit more skilled workers from DVCs.
D)  target the banking sector for the most help.E) A) and B)
F) A) and C)

Question 12

The government of a DVC may force the economy to save by deliberately causing inflation.This policy is undesirable because inflation may

Accepted Answer

A)  distort investment away from productive facilities and toward luxury housing and precious metals.
B)  increase voluntary saving because the value of money is depreciating.
C)  contribute to a balance of trade surplus.
D)  entail all of these problems.E) None of the above
F) All of the above

Question 13

Large agricultural subsidies for food and fiber in IACs hurt the economies of the DVCs by

Accepted Answer

A)  causing higher prices for imported food products.
B)  lowering saving rates in the DVCs.
C)  encouraging "brain drains" from the DVCs.
D)  reducing world agricultural prices and thus export income of the DVCs.E) A) and B)
F) A) and C)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

One of the major investment obstacles in less-developed nations is

Accepted Answer

A)  an accumulation of savings with no place to invest the funds.
B)  a poor public infrastructure that hurts returns on private investment.
C)  a progressive tax system that is efficient in collecting taxes on investment.
D)  a low unemployment rate that makes it difficult to find the needed workers for businesses.E) A) and B)
F) A) and C)

Question 16

Capital flight is a problem to DVCs because it

Accepted Answer

A)  causes the value of a DVC's currency to appreciate.
B)  reduces the volume of DVC investment.
C)  reduces the flow of foreign aid from the IACs.
D)  causes inflation in the DVCs.E) A) and C)
F) A) and D)

Question 17

If the real outputs per capita of a rich nation and a poor nation grow at the same percentage rate, the absolute income gap between the two nations will shrink.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following countries had the highest population density (population per square km)  in 2014?

Accepted Answer

A)  United States
B)  India
C)  China
D)  VenezuelaE) A) and C)
F) A) and B)

Question 19

Industrially advanced countries can best help DVCs by

Accepted Answer

A)  directing requests from DVCs for aid to the World Bank.
B)  using the International Monetary Fund to determine exchange rates in DVCs.
C)  increasing management control over development projects.
D)  adopting policies that expand trade with DVCs.E) All of the above
F) A) and B)

Question 20

Which of the following factors contributes to the weak economic growth in DVCs?

Accepted Answer

A)  an increase in labor productivity in DVCs
B)  a decrease in international debts of DVCs
C)  an increase in the rate of saving in a DVC
D)  a decrease in the prices of DVC natural resourcesE) A) and D)
F) All of the above

Exam 42: The Economics of Developing Countries

The vicious circle of poverty is based on the connections between low income, low saving, low investment, and low productivity.

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

If the real output of a DVC increases from $200 billion to $260 billion and its population increases from 100 to 120 million, its real per capita output will have

Correct AnswerverifiedShow Answer

Large agricultural subsidies for food and fiber in IACs hurt the economies of the DVCs by

Correct AnswerverifiedShow Answer

If the real outputs per capita of a rich nation and a poor nation grow at the same percentage rate, the absolute income gap between the two nations will shrink.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The population growth rate in IACs (industrially advanced countries) in 2000-2010 averaged 0.7 percent per year.This compares to what percentage growth per year in low- income DVCs (developing countries) ?

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A major criticism of foreign aid to developing nations is that it

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Capital flight is a problem to DVCs because it

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An increasing share of the private capital flows to DVCs in recent years has been in the form of

Correct AnswerverifiedShow Answer

Which of the following countries had the highest population density (population per square km) in 2014?

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More than 75 percent of the world's income is earned by what percentage of the world's population?

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In recent years, the governments of the IACs have

Correct AnswerverifiedShow Answer

One suggested policy that industrially advanced nations could adopt to foster economic growth in less-developed nations would be to

Correct AnswerverifiedShow Answer

The United States in 2014 had about

Correct AnswerverifiedShow Answer

The government of a DVC may force the economy to save by deliberately causing inflation.This policy is undesirable because inflation may

Correct AnswerverifiedShow Answer

Industrially advanced countries can best help DVCs by

Correct AnswerverifiedShow Answer

One of the major investment obstacles in less-developed nations is

Correct AnswerverifiedShow Answer

Which of the following countries had the best score in the Corruption Perception Index in 2015?

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Which of the following factors contributes to the weak economic growth in DVCs?

Correct AnswerverifiedShow Answer

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