Question 1

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

Question 2

Land reform (or the reform of land ownership) is a relatively minor institutional obstacle to economic
growth in many developing countries.

Accepted Answer

A) True 
 B)False

Question 3

If a technological advance expands output and requires a smaller investment in capital goods, this technological advance

Accepted Answer

A)   is capital-using.
B)   must involve nonﬁnancial investment.
C)   is capital-saving.
D)   must pertain to the infrastructure.E) A) and D)
F) All of the above

Question 4

The fertility rates-the number of children per woman's lifetime-in most DVCs (developing countries)  are

Accepted Answer

A)   rising slowly.
B)   rising quickly.
C)   staying constant.
D)   declining.E) All of the above
F) None of the above

Question 5

How are countries classiﬁed based on income?

Accepted Answer

The World Bank classiﬁes countries into ...

Question 6

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-suﬃcient.E) B) and C)
F) All of the above

Question 7

All of the following contribute to low investment spending in DVCs except

Accepted Answer

A)   low rates of saving.
B)   inadequacy of public capital goods (infrastructure) .
C)   political instability.
D)   expensive labor.E) C) and D)
F) A) and C)

Question 8

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

Question 9

Which of the following describes the vicious circle of poverty?

Accepted Answer

A)   Government spending for public goods is inﬂationary, and this undermines incentives to save and invest.
B)   Higher incomes increase consumption at the expense of capital accumulation, which causes income to fall.
C)   Low per capita incomes cause low levels of saving and investment, which mean low productivity and therefore low incomes.
D)   A growing national income increases the demand for money, which increases the interest rate and reduces investment.E) A) and D)
F) B) and D)

Question 10

Which two of the following countries had the worst score in the Corruption Perceptions Index in 2015?

Accepted Answer

A)   Italy and Greece
B)   China and Singapore
C)   Mexico and Russia
D)   Somalia and AfghanistanE) C) and D)
F) A) and B)

Question 11

Which of the following is a true statement?

Accepted Answer

A)   Direct foreign investment to DVCs is increasingly provided by commercial banks.
B)   Direct foreign investment to DVCs has dwindled to near zero in recent years.
C)   Approximately 5 percent of the GDP of IACs goes to foreign aid.
D)   Foreign aid from the IACs to the DVCs has greatly expanded in the past several years.E) B) and D)
F) None of the above

Question 12

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

Question 13

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

Question 14

Studies generally show that if there is more investment in capital goods in DVCs, there will be greater

Accepted Answer

A)   capital ﬂight.
B)   economic growth.
C)   underemployment.
D)   unemployment.E) None of the above
F) All of the above

Question 15

One recommended policy that IACs could adopt to help DVCs is to recruit and hire skilled workers
from DVCs for businesses in IACs.

Accepted Answer

A) True 
 B)False

Question 16

Economic growth in the DVCs might increase if IACs

Accepted Answer

A)   reduce their tariffs and import quotas.
B)   encourage more immigration of highly skilled DVC workers.
C)   outlaw direct private investment abroad by IAC corporations.
D)   discourage capital ﬂight to the DVCs.E) B) and D)
F) A) and D)

Question 17

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 18

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) B) and D)
F) A) and B)

Question 19

How can the DVCs break out of the vicious circle of poverty?

Accepted Answer

Many economists think that the key to br...

Question 20

The role of government in fostering economic growth in DVCs has been criticized because

Accepted Answer

A)   most governments operate as dictatorships.
B)   there is often poor administration and corruption in government.
C)   government is generally supportive of business at the expense of labor.
D)   governments have adopted the unpopular method of forced savings to stimulate investment.E) All of the above
F) C) and D)

Exam 22: The Economics of Developing Countries

One recommended policy that IACs could adopt to help DVCs is to recruit and hire skilled workers from DVCs for businesses in IACs.

Correct AnswerverifiedShow Answer

Economic growth in the DVCs might increase if IACs

Correct AnswerverifiedShow Answer

All of the following contribute to low investment spending in DVCs except

Correct AnswerverifiedShow Answer

The World Bank operates primarily as a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a technological advance expands output and requires a smaller investment in capital goods, this technological advance

Correct AnswerverifiedShow Answer

Land reform (or the reform of land ownership) is a relatively minor institutional obstacle to economic growth in many developing countries.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The fertility rates-the number of children per woman's lifetime-in most DVCs (developing countries) are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Studies generally show that if there is more investment in capital goods in DVCs, there will be greater

Correct AnswerverifiedShow Answer

How are countries classiﬁed based on income?

Correct AnswerverifiedThe World Bank classiﬁes countries into ...View AnswerShow Answer

In recent years, the governments of the IACs have

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The role of government in fostering economic growth in DVCs has been criticized because

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Which two of the following countries had the worst score in the Corruption Perceptions Index in 2015?

Correct AnswerverifiedShow Answer

Which of the following describes the vicious circle of poverty?

Correct AnswerverifiedShow Answer

How can the DVCs break out of the vicious circle of poverty?

Correct AnswerverifiedMany economists think that the key to br...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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The World Bank classiﬁes countries into ...
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Many economists think that the key to br...
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