Question 1

Underemployment occurs:

Accepted Answer

A)   when workers do not have jobs.
B)   when farm workers become more productive.
C)   when workers are working fewer hours than they desire or when they are working less productively than they are capable.
D)   in IACs but not in the DVCs.E) A) and D)
F) All of the above

Question 2

Rapid population growth can be an obstacle to economic development:

Accepted Answer

A)   because it can translate a relatively large increase in real output into a small increase in real output per capita.
B)   because more investment will be required to simply maintain the quantity of capital goods per person.
C)   because it may lead to the overutilization and therefore ecological degradation of farmland.
D)   for all of these reasons.E) A) and B)
F) A) and C)

Question 3

DVCs tend to have permanent shortages of farm labor.

Accepted Answer

A) True 
 B)False

Question 4

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.E) A) and D)
F) A) and B)

Question 5

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) None of the above
F) All of the above

Question 6

The international agency that lends money to DVCs for economic development projects is the:

Accepted Answer

A)   World Bank.
B)   International Monetary Fund (IMF) .
C)   World Trade Organization (WTO) .
D)   World Credit Union.E) A) and C)
F) All of the above

Question 7

In recent years,U.S.foreign aid has been:

Accepted Answer

A)   less than 1 percent of its output.
B)   about 2 percent of its output.
C)   about 3 percent of its output.
D)   about 5 percent of its output.E) A) and B)
F) None of the above

Question 8

It is sometimes difficult to transfer the advanced technologies of the industrialized nations to the DVCs because:

Accepted Answer

A)   the technologies of the IACs are frequently based on relatively expensive labor and relatively cheap capital.
B)   the resource endowments of the IACs and the DVCs are highly similar.
C)   international patent laws prohibit such transfers.
D)   the technologies of the IACs are frequently based on relatively cheap labor and relatively expensive capital.E) C) and D)
F) All of the above

Question 9

To be classified as a low-income developing country,annual per capita income in 2010 needed to be:

Accepted Answer

A)   $1,005 or less.
B)   $580 or less.
C)   $3,723 or less.
D)   $925 or less.E) A) and B)
F) None of the above

Question 10

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 11

Most of the DVCs find it difficult to accumulate capital goods because:

Accepted Answer

A)   the terms of trade prohibit the inflow of private capital from the advanced nations.
B)   it is very difficult to restrict consumption and thus to free resources for capital goods production.
C)   domestic monetary policies designed to achieve price stability result in low interest rates,thereby discouraging investment.
D)   investment is interest inelastic in DVCs.E) None of the above
F) All of the above

Question 12

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 only decline 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.E) A) and D)
F) A) and B)

Question 13

Infrastructure is best illustrated by:

Accepted Answer

A)   farm equipment.
B)   school buildings and highways.
C)   machinery and equipment for the production of consumer goods.
D)   government tax revenues.E) None of the above
F) All of the above

Question 14

Which of these sets of nations are considered high-income economies?

Accepted Answer

A)   Brazil,Thailand,and South Africa.
B)   China,India,and Russia.
C)   Canada,Switzerland,and France.
D)   United States,South Korea,and Mexico.E) C) and D)
F) All of the above

Question 15

The primary function of the International Finance Corporation (IFC) is to:

Accepted Answer

A)   provide U.S.surplus food to low-income countries.
B)   provide short-term loans to poor countries to finance international trade deficits.
C)   make infrastructure loans,that is,loans for highways,schools,communication facilities,and so forth.
D)   make loans to private enterprises in the DVCs.E) A) and D)
F) A) and C)

Question 16

Saving is low in many DVCs primarily because income is very equally distributed.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

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

Question 19

The demographic transition concept suggests that:

Accepted Answer

A)   effective birth control is the primary prerequisite of DVC income growth.
B)   income growth must first occur before DVC birth rates will decline.
C)   children are economic assets in the IACs but economic liabilities in the DVCs.
D)   the IACs will have higher birth rates than the DVCs.E) A) and B)
F) A) and C)

Question 20

If the real output of a DVC increases from $200 billion to $260 billion and its population increases from 100 to 120 million,its real per capita output will have:

Accepted Answer

A)   remained unchanged.
B)   increased by about $167.
C)   increased by about $55.
D)   decreased by about $20.E) A) and C)
F) None of the above

Exam 41: The Economics of Developing Countries

An economy's infrastructure refers to its:

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To be classified as a low-income developing country,annual per capita income in 2010 needed to be:

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Which of the following describes the vicious circle of poverty?

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The primary function of the International Finance Corporation (IFC) is to:

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

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Which of these sets of nations are considered high-income economies?

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It is sometimes difficult to transfer the advanced technologies of the industrialized nations to the DVCs because:

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In recent years,U.S.foreign aid has been:

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In recent years,the governments of the IACs have:

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Infrastructure is best illustrated by:

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Underemployment occurs:

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Population growth remains high in most DVCs:

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Saving is low in many DVCs primarily because income is very equally distributed.

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Rapid population growth can be an obstacle to economic development:

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DVCs tend to have permanent shortages of farm labor.

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The demographic transition view alleges that:

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If the real output of a DVC increases from $200 billion to $260 billion and its population increases from 100 to 120 million,its real per capita output will have:

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Most of the DVCs find it difficult to accumulate capital goods because:

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The international agency that lends money to DVCs for economic development projects is the:

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The demographic transition concept suggests that:

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