Question 1

DVCs tend to have permanent shortages of farm labor.

Accepted Answer

A) True 
 B)False

Question 2

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) C) and D)
F) B) and D)

Question 3

An advantage of direct foreign investment (compared to foreign loans) is that management skill and technological knowledge often accompany such capital flows.

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S.aid programs.

Accepted Answer

A) True 
 B)False

Question 6

Many countries remain poor because they currently are poor.This statement summarizes the

Accepted Answer

A)  infrastructure problem.
B)  vicious circle of poverty.
C)  demographic transition problem.
D)  problem of capital flight.E) C) and D)
F) All of the above

Question 7

Low-income developing countries generally have the following characteristics except

Accepted Answer

A)  low population growth rates.
B)  low levels of industrialization.
C)  dependency on exports of agricultural products or raw materials.
D)  minimal amounts of capital resources.E) A) and B)
F) A) and C)

Question 8

The World Bank operates primarily as a

Accepted Answer

A)  deposit institution for nations' gold supplies.
B)  coordinator for private banks in major nations.
C)  lender of last resort to less-developed nations.
D)  U.S.government agency that supervises banks worldwide.E) None of the above
F) All of the above

Question 9

Which of the following is a factor limiting saving in DVCs?

Accepted Answer

A)  the lack of foreign aid and loans from the World Bank
B)  Governments control the banking system and set low interest rates.
C)  the flight of private savings to investments in IACs, where there is less risk
D)  Those who do save make their savings available only to their families, who use it for consumption.E) B) and C)
F) None of the above

Question 10

Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC.If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will

Accepted Answer

A)  remain unchanged at $19,000.
B)  increase by $760.
C)  decrease by $1,000.
D)  increase by $19,760.E) A) and D)
F) A) and C)

Question 11

The capricious universe view is the idea that the IACs are exploiting the DVCs.

Accepted Answer

A) True 
 B)False

Question 12

A major complaint of DVCs about foreign aid from IACs is that it

Accepted Answer

A)  is allocated just to the poorest nations.
B)  is equally borne by the donor nations.
C)  needs to be quantitatively larger for DVCs.
D)  takes too long a time to reach DVCs.E) A) and B)
F) None of the above

Question 13

The demographic transition view of population growth believes that slower population growth will lead to rising incomes.

Accepted Answer

A) True 
 B)False

Question 14

Reduction of tariff barriers against DVC imports would benefit both the DVCs and the IACs.

Accepted Answer

A) True 
 B)False

Question 15

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) B) and C)
F) All of the above

Question 16

The building of a new factory by a corporation would be an example of increasing the infrastructure in a developing nation.

Accepted Answer

A) True 
 B)False

Question 17

Japan is a nation that achieved a high standard of living despite having a very limited supply of natural resources.

Accepted Answer

A) True 
 B)False

Question 18

The richest 20 percent of the world's population receives more than 75 percent of the world's income, while the poorest 20 percent receives less than 2 percent of the world's income.

Accepted Answer

A) True 
 B)False

Question 19

Development experts are less enthusiastic than they used to be about three decades ago about the positive role of DVC governments in promoting economic growth in their less- developed nations because of the

Accepted Answer

A)  corruption in government.
B)  availability of foreign aid.
C)  need for a greater tax collection.
D)  need for more public capital goods.E) C) and D)
F) B) and D)

Question 20

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

Exam 42: The Economics of Developing Countries

Reduction of tariff barriers against DVC imports would benefit both the DVCs and the IACs.

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A major complaint of DVCs about foreign aid from IACs is that it

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Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC.If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will

Correct AnswerverifiedShow Answer

The building of a new factory by a corporation would be an example of increasing the infrastructure in a developing nation.

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In recent decades,

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The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since the Second World War because of U.S.aid programs.

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Many countries remain poor because they currently are poor.This statement summarizes the

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The capricious universe view is the idea that the IACs are exploiting the DVCs.

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Japan is a nation that achieved a high standard of living despite having a very limited supply of natural resources.

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Which of the following is a factor limiting saving in DVCs?

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An advantage of direct foreign investment (compared to foreign loans) is that management skill and technological knowledge often accompany such capital flows.

Correct AnswerverifiedShow Answer

DVCs tend to have permanent shortages of farm labor.

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

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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The richest 20 percent of the world's population receives more than 75 percent of the world's income, while the poorest 20 percent receives less than 2 percent of the world's income.

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The World Bank operates primarily as a

Correct AnswerverifiedShow Answer

Low-income developing countries generally have the following characteristics except

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

Correct AnswerverifiedShow Answer

Development experts are less enthusiastic than they used to be about three decades ago about the positive role of DVC governments in promoting economic growth in their less- developed nations because of the

Correct AnswerverifiedShow Answer

The demographic transition view of population growth believes that slower population growth will lead to rising incomes.

Correct AnswerverifiedShow Answer

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