Question 1

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 2

Population growth remains high in most DVCs

Accepted Answer

A)  because religious and sociocultural considerations favor large families.
B)  because children may provide economic security for aging parents.
C)  because children provide agricultural labor in rural areas.
D)  for all of these reasons.E) A) and B)
F) All of the above

Question 3

Birth- and population-control efforts in many DVCs (developing countries)  face the following obstacles except

Accepted Answer

A)  low literacy rates.
B)  religious reasons.
C)  a peasant agriculture view about children.
D)  government authorities.E) None of the above
F) A) and D)

Question 4

An economy's infrastructure refers to its

Accepted Answer

A)  public capital goods, such as roads, schools, and power facilities.
B)  financial and banking institutions.
C)  land and natural resources.
D)  surplus supplies of unskilled labor.E) B) and D)
F) B) and C)

Question 5

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

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The DVCs are

Accepted Answer

A)  located primarily in Northern Europe.
B)  located primarily in Western Europe.
C)  located primarily in Africa, Asia, and Latin America.
D)  more or less evenly distributed over the various continents.E) A) and C)
F) A) and B)

Question 8

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

Question 9

Investment in-kind refers to the possibility that

Accepted Answer

A)  DVCs will invest for the purpose of becoming less dependent on world markets.
B)  a DVC will overinvest in industries in which it has a comparative advantage, disrupting its development program.
C)  newly established manufacturing firms may expand by reinvesting their profits.
D)  surplus labor in, say, agriculture can be diverted to the production of simple capital goods such as earthen dams.E) A) and B)
F) B) and C)

Question 10

Per capita income in the United States in 2014 was how many times greater than that in China?

Accepted Answer

A)  3 times
B)  12 times
C)  7.5 times
D)  17 timesE) A) and B)
F) C) and D)

Question 11

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Refer to the table.If per capita income increases by 10 percent over five years in each of the nations shown, the per capita income gap between country C and country A

Accepted Answer

A)  will remain the same.
B)  will rise from $30,934 to $34,027.
C)  may rise or fall depending on the rate of population growth.
D)  will rise from $31,555 to $34,710.E) None of the above
F) All of the above

Question 14

Most of the DVCs of the world are located in Western Europe.

Accepted Answer

A) True 
 B)False  False

Question 15

Which of the following IACs (industrially advanced countries)  gave the largest share of its GDP to foreign aid or development assistance to DVCs (developing countries)  in 2015?

Accepted Answer

A)  Sweden
B)  Japan
C)  United States
D)  GermanyE) A) and B)
F) A) and C)

Question 16

In the 1990s,

Accepted Answer

A)  direct private investment to the DVCs increased, and government-provided foreign aid decreased.
B)  both direct private investment and government-provided foreign aid to the DVCs increased.
C)  both direct private investment and government-provided foreign aid to the DVCs decreased.
D)  direct private investment to the DVCs decreased, and government-provided foreign aid increased.E) A) and B)
F) All of the above A

Question 17

The "vicious circle of poverty" for developing nations can best be described by

Accepted Answer

A)  low levels of international trade that reduce exports and increase the dependence on imports.
B)  low incomes that inhibit saving and the accumulation of real and human capital, making it difficult to increase productivity and income.
C)  a large government sector, which reduces the availability of private investment spending but increases macroeconomic stability.
D)  a lack of entrepreneurial talent that limits the formation of businesses and the development of private businesses.E) A) and B)
F) A) and C)

Question 18

If the real GDP of a DVC increases from $600 billion to $630 billion and its population increases from 200 million to 216 million, its real per capita GDP will

Accepted Answer

A)  increase by about $83.
B)  decrease by about $83.
C)  remained unchanged.
D)  decrease by about $19.E) B) and C)
F) A) and D) B

Question 19

According to the United Nations, approximately what percentage of the world's income is received by the richest one-fifth of the world's population?

Accepted Answer

A)  24 percent
B)  38 percent
C)  60 percent
D)  75 percentE) A) and B)
F) C) and D)

Question 20

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

Exam 19: 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

Population growth remains high in most DVCs

Correct AnswerverifiedShow Answer

Birth- and population-control efforts in many DVCs (developing countries) face the following obstacles except

Correct AnswerverifiedShow Answer

An economy's infrastructure refers to its

Correct AnswerverifiedShow Answer

The World Bank operates primarily as a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The DVCs are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Investment in-kind refers to the possibility that

Correct AnswerverifiedShow Answer

Per capita income in the United States in 2014 was how many times greater than that in China?

Correct AnswerverifiedShow Answer

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the table.If per capita income increases by 10 percent over five years in each of the nations shown, the per capita income gap between country C and country A

Correct AnswerverifiedShow Answer

Most of the DVCs of the world are located in Western Europe.

Correct AnswerverifiedFalse

Which of the following IACs (industrially advanced countries) gave the largest share of its GDP to foreign aid or development assistance to DVCs (developing countries) in 2015?

Correct AnswerverifiedShow Answer

In the 1990s,

Correct AnswerverifiedA

The "vicious circle of poverty" for developing nations can best be described by

Correct AnswerverifiedShow Answer

If the real GDP of a DVC increases from $600 billion to $630 billion and its population increases from 200 million to 216 million, its real per capita GDP will

Correct AnswerverifiedB

According to the United Nations, approximately what percentage of the world's income is received by the richest one-fifth of the world's population?

Correct AnswerverifiedShow Answer

Capital flight is a problem to DVCs because it

Correct AnswerverifiedShow Answer

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False

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