Question 1

Capital flight refers to the fact that many DVCs must use their export earnings to pay interest on their outstanding external debts.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is typically not a problem for low-income DVCs?

Accepted Answer

A)   capital flight
B)   "brain drain"
C)   high saving rates that slow aggregate demand growth
D)   poor infrastructure

Question 3

In recent years, the industrially advanced nations as a group have provided foreign aid amounting to about what percentage of their aggregate outputs?

Accepted Answer

A)   0.25 percent
B)   0.7 percent
C)   1 percent
D)   2 percent A

Question 4

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.

Question 5

Infrastructure is best illustrated by

Accepted Answer

A)   business equipment and factories.
B)   agricultural machinery and tools.
C)   financial institutions.
D)   roads and bridges.

Question 6

Suppose that the average annual rate of population increase in Econland in recent years was about 2 percent. Based on this rate of growth, the population of Econland will double in about

Accepted Answer

A)   7 years.
B)   11 years.
C)   35 years.
D)   46 years.

Question 7

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.

Question 8

At the present time, the largest percentage of the national incomes of the low-income DVCs is used for

Accepted Answer

A)   imports of the finished products of foreign industries.
B)   food.
C)   infrastructure.
D)   industrial development.

Question 9

In 2014, the GDP of the United States was approximately

Accepted Answer

A)   $8 trillion less than the GDP of the 135 DVCs in that year.
B)   $8 trillion more than the GDP of the 135 DVCs in that year.
C)   twice the GDP of the 135 DVCs in that year.
D)   the same as the GDP of 135 DVCs in that year.

Question 10

Without an abundant endowment of natural resources, a nation cannot achieve rapid economic growth.

Accepted Answer

A) True 
 B)False

Question 11

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.

Question 12

In the DVCs, underemployment frequently takes the form of

Accepted Answer

A)   factory workers who are working longer hours than they would prefer.
B)   workers who are employed inefficiently in small industry when they could be highly productive in agriculture.
C)   farmers whose productivity is very low.
D)   craft workers and artisans who are replaced by simple machinery and equipment.

Question 13

The demographic transition view alleges that

Accepted Answer

A)   the DVCs must first accept the use of birth control techniques to increase their standards of living.
B)   population growth will decline only if mortality rates exceed birth rates.
C)   if incomes first rise, population growth will then decline.
D)   population growth has no bearing on a nation's per capita income.

Question 14

(Last Word)  Early experience with conditional cash transfers has revealed that

Accepted Answer

A)   most of these cash transfers available go unused because parents don't want to fulfill the requirements.
B)   there is no significant improvement in nutrition and health compared to nonrecipients.
C)   they encourage school enrollment, but poor-quality schools limit the ability to lift people out of poverty.
D)   the resulting improvements in education and health give the recipients a significant earnings advantage over nonrecipients. C

Question 15

One reason why foreign aid is viewed as harmful is that it promotes dependency.

Accepted Answer

A) True 
 B)False

Question 16

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 percent C

Question 17

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

Accepted Answer

A)   Italy
B)   China
C)   Mexico
D)   Russia

Question 18

Trade barriers that restrict imports from developing countries tend to be

Accepted Answer

A)   highest in the capital goods and technology sectors of those economies.
B)   lowest in the labor-intensive manufacturing sectors of those economies.
C)   lowest for those products in which DVCs have a comparative advantage.
D)   highest for those products in which DVCs have a comparative advantage.

Question 19

One way through which industrially advanced economies can help DVCs is known as "official development assistance (ODA) ," or more simply,

Accepted Answer

A)   foreign investment.
B)   international capital.
C)   foreign aid.
D)   international trade.

Question 20

A factor that limits the amount of saving in developing countries is the fact that

Accepted Answer

A)   the banking system does not encourage saving.
B)   there is too much foreign aid, so savings is not needed.
C)   the level of aggregate domestic output is low.
D)   the government controls financial institutions and makes it difficult for people to save.

Exam 28: The Economics of Developing Countries

Capital flight refers to the fact that many DVCs must use their export earnings to pay interest on their outstanding external debts.

Correct AnswerverifiedShow Answer

Which of the following is typically not a problem for low-income DVCs?

Correct AnswerverifiedShow Answer

In recent years, the industrially advanced nations as a group have provided foreign aid amounting to about what percentage of their aggregate outputs?

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

Infrastructure is best illustrated by

Correct AnswerverifiedShow Answer

Suppose that the average annual rate of population increase in Econland in recent years was about 2 percent. Based on this rate of growth, the population of Econland will double in about

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

At the present time, the largest percentage of the national incomes of the low-income DVCs is used for

Correct AnswerverifiedShow Answer

In 2014, the GDP of the United States was approximately

Correct AnswerverifiedShow Answer

Without an abundant endowment of natural resources, a nation cannot achieve rapid economic growth.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the DVCs, underemployment frequently takes the form of

Correct AnswerverifiedShow Answer

The demographic transition view alleges that

Correct AnswerverifiedShow Answer

(Last Word) Early experience with conditional cash transfers has revealed that

Correct AnswerverifiedC

One reason why foreign aid is viewed as harmful is that it promotes dependency.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

Trade barriers that restrict imports from developing countries tend to be

Correct AnswerverifiedShow Answer

One way through which industrially advanced economies can help DVCs is known as "official development assistance (ODA) ," or more simply,

Correct AnswerverifiedShow Answer

A factor that limits the amount of saving in developing countries is the fact that

Correct AnswerverifiedShow Answer

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