Question 1

Economists would most likely suggest that advanced nations can best assist in the economic development of developing nations by

Accepted Answer

A)  increasing the amount of military aid to strengthen the government's role in providing law and order.
B)  increasing trade barriers so that less-developed nations will become more self-sufficient.
C)  reducing trade barriers and increasing the amount of private and public capital.
D)  decreasing the amounts of private capital or foreign aid to reduce the level of neocolonialism.

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.

Question 3

The "brain drain" problem in the DVCs refers to the fact the best-educated workers

Accepted Answer

A)  are reluctant to become entrepreneurs.
B)  are concentrated in rural areas where their skills are underutilized.
C)  often immigrate to industrialized countries.
D)  are reluctant to work in the public sector.

Question 4

The average per capita income in 2014 for low-income developing nations was about

Accepted Answer

A)  $630.
B)  $2,100.
C)  $1,240.
D)  $4,600.

Question 5

Suppose that surplus labor in a Pakistani village is used to build a medical clinic and dig several wells.This is an illustration of

Accepted Answer

A)  foreign aid.
B)  capital-saving investment.
C)  in-kind investment.
D)  technological advance.

Question 6

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 7

Per capita incomes must first grow for birth rates to decline.This statement describes the

Accepted Answer

A)  human capital view of population growth.
B)  traditional view of population growth.
C)  capricious universe view.
D)  demographic transition view of population growth.

Question 8

The lack of an entrepreneurial class in developing nations tends to

Accepted Answer

A)  keep workers from migrating to cities from rural areas.
B)  reduce the level of capital investment.
C)  force the need for land reform.
D)  keep governments stable.

Question 9

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

Accepted Answer

A)  The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC.
B)  Capital flight reduces investment opportunities and the need for saving in DVCs.
C)  There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving.
D)  The domestic output of DVCs is so low that the absolute volume of saving is small.

Question 10

Making "soft loans"-loans that may not be self-liquidating-to the very poorest of the developing countries on relatively liberal terms is the primary function of the

Accepted Answer

A)  United Nations.
B)  International Finance Corporation.
C)  New Global Compact.
D)  International Development Association.

Question 11

If two nations have different per capita income levels and their rates of economic growth are identical, then the absolute per capita income differential

Accepted Answer

A)  will remain constant.
B)  may either widen or diminish.
C)  will diminish.
D)  will widen.

Question 12

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.

Question 13

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.

Question 14

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 15

A developing nation may not experience an increase in the average standard of living even if it increases its output of goods and services because of

Accepted Answer

A)  land reform.
B)  population growth.
C)  underemployment and disguised unemployment.
D)  capital-saving technology.

Question 16

Brazil, Mexico, and Thailand are referred to as

Accepted Answer

A)  industrially advanced countries.
B)  upper-middle-income developing countries.
C)  low-income developing countries.
D)  command economies.

Question 17

Foreign aid to the DVCs has been criticized

Accepted Answer

A)  because it may generate economic dependence on the IACs.
B)  because it encourages the centralization of government power over the economy.
C)  because government corruption in the DVCs causes aid to be misused.
D)  for all of these reasons.

Question 18

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

Accepted Answer

A)  the use of capital-saving technology
B)  development of natural resources
C)  widespread political corruption
D)  an increase in foreign aid

Question 19

Which of the following is most characteristic of developing nations?

Accepted Answer

A)  a small percentage of the labor force in agriculture
B)  a relatively equitable distribution of income
C)  low levels of labor productivity
D)  low rates of population growth

Question 20

Which of the following is not a reason why government may play a key role in the early stage of economic development in developing nations?

Accepted Answer

A)  the infrastructure provided by government
B)  the abundance of entrepreneurs who need to be regulated
C)  the need to encourage saving and investment in the economy
D)  the provision of law and order so that commerce can flourish

Exam 19: The Economics of Developing Countries

The average per capita income in 2014 for low-income developing nations was about

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Economists would most likely suggest that advanced nations can best assist in the economic development of developing nations by

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Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

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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

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

Correct AnswerverifiedShow Answer

Which of the following is most characteristic of developing nations?

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

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The lack of an entrepreneurial class in developing nations tends to

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Foreign aid to the DVCs has been criticized

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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

Suppose that surplus labor in a Pakistani village is used to build a medical clinic and dig several wells.This is an illustration of

Correct AnswerverifiedShow Answer

Per capita incomes must first grow for birth rates to decline.This statement describes the

Correct AnswerverifiedShow Answer

A developing nation may not experience an increase in the average standard of living even if it increases its output of goods and services because of

Correct AnswerverifiedShow Answer

Brazil, Mexico, and Thailand are referred to as

Correct AnswerverifiedShow Answer

Making "soft loans"-loans that may not be self-liquidating-to the very poorest of the developing countries on relatively liberal terms is the primary function of the

Correct AnswerverifiedShow Answer

The United States in 2014 had about

Correct AnswerverifiedShow Answer

If two nations have different per capita income levels and their rates of economic growth are identical, then the absolute per capita income differential

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The "brain drain" problem in the DVCs refers to the fact the best-educated workers

Correct AnswerverifiedShow Answer

Which of the following is not a reason why government may play a key role in the early stage of economic development in developing nations?

Correct AnswerverifiedShow Answer

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