Deck 19: Economic Development

Question 1

Which of the following statements is true? According to the World Bank,

A) in 2005 about 1.4 billion people, about a quarter of the population of developing countries was poor, defined as living on less than $1.25 a day, the international poverty line.
B) between 1980 and 2005, the number of people living below the international poverty line, defined as living on less than $1.25 a day, has decreased significantly.
C) poverty reduction in sub-Saharan Africa has been phenomenal over the last 25 years.
D) the majority of the world's poor are in the Indian sub-continent and in China.

Answer 1

in 2005 about 1.4 billion people, about a quarter of the population of developing countries was poor, defined as living on less than $1.25 a day, the international poverty line.

Question 2

Compared to middle- and high-income countries, low-income countries are often characterized by

A) higher rates of poverty.
B) less income inequality.
C) a smaller share of income used for consumption.
D) a smaller proportion of the labor force in agriculture.

Answer 2

higher rates of poverty.

Question 3

In which of the following regions has poverty reduction been minimal in over the past 25 years?

A) East Asia
B) sub-Saharan Africa
C) Latin America
D) North China and Tibet

Answer 3

sub-Saharan Africa

Question 4

The World Bank, an international organization designed to support economic development, classifies countries according to their levels of per capita gross national income. Countries with per capita incomes of more than $936 but less than $11,455 in 2007 were classified as

A) less-developed countries.
B) transitional countries.
C) developing countries.
D) middle-income countries.

Question 5

According to the World Bank's classification of countries' levels of per capita gross national income,

A) about one-third of the world's population lived in high-income countries in 2007.
B) less than 20% of the world's population lived in high-income countries in 2007.
C) the percentage of the world's population living in high-income countries increased significantly between 1997 and 2007.
D) the percentage of the world's population migrating from middle-income to high-income countries has been increasing since 2000.

Question 6

To facilitate an international comparison of standards of living, the World Bank compares incomes and converts currencies to dollars on the basis of purchasing power. This measure is reported in

A) U.S. dollars.
B) a trade-weighted dollar.
C) international dollars.
D) real U.S. dollars, that is, adjusted for inflation.

Question 7

Those countries not among the high-income nations of the world are considered

A) dependent nations.
B) backward economies.
C) developing countries.
D) under-developed countries.

Question 8

One way by which the World Bank converts gross national income (GNI) figures to dollars is to take the GNI in a local currency and convert using the exchange rate, averaged over a three-year period in order to smooth out the effects of currency fluctuations. Which of the following is a shortcoming of this method for international comparisons of standards of living?

A) Currency exchange rates may fluctuate drastically from year-to-year.
B) A country could have a relatively high standard of living but, for a variety of reasons, a low exchange rate.
C) This method cannot be applied to countries that have fixed exchange rates.
D) The method does not take into account trade conducted on the basis of barter.

Question 9

Which of the following characterize low-income nations, compared to middle-income and high-income countries?
I. higher rates of population growth
II. greater income inequality
III. a larger proportion of the labor force in agriculture
IV. a smaller share of income used for consumption
V. higher rates of unemployment

A) all of the above
B) II, III, IV, and V only
C) II, III, and IV only
D) II, III, and V only

Question 10

Compared to middle- and high- income countries, low-income countries are often characterized by

A) higher rates of population growth.
B) greater government control by large, relatively poor groups.
C) a smaller share of income used for consumption.
D) a smaller proportion of the labor force in agriculture.

Question 11

According to the World Bank's classification of countries' levels of per capita gross national income, in 2007 the majority of the world's population lived

A) in middle-income countries.
B) in low-income countries.
C) below the international poverty line of $1.25 a day.
D) in the African continent.

Question 12

Which of the following is true about low-income countries?

A) They face high levels of potential output, largely because of the size of their population.
B) They tend to have low levels of potential output and are producing well below their potential.
C) They face high levels of potential output, but tend to produce well below their potential because of high illiteracy rates.
D) They face high levels of potential output, but tend to produce well below their potential because of political instability.

Question 13

The World Bank, an international organization designed to support economic development, classifies countries according to their levels of per capita gross national income. Countries with per capita incomes of $935 or less in 2007 were classified as

A) under-developed countries.
B) low-income countries.
C) impoverished countries.
D) middle-income countries.

Question 14

Which of the following statements is true about an international dollar?

A) It has the same purchasing power as does the U.S. dollar in the United States.
B) One international dollar has a greater purchasing power in the United States than in India.
C) One international dollar has a lower purchasing power in the United States than in India.
D) It is not possible to compare the purchasing power of one international dollar without information on the prices of goods and services in different countries.

Question 15

A developing country, sometimes referred to as a third-world country, is a country

A) that is a low- or middle-income country.
B) that is a low-income country but not a middle-income country.
C) where at least 40% of its population live below the international poverty line.
D) characterized by a higher rate of population growth.

Question 16

To facilitate an international comparison of standards of living, the World Bank

A) uses a weighted index of exchange rates to convert local currency.
B) converts currencies to dollars on the basis of purchasing power.
C) assigns more weight to agricultural production than to manufacturing since most low-income countries tend to be agrarian economies.
D) converts currencies to U.S. dollars using an exchange rate, averaged over a three-year period in order to smooth out the effects of currency fluctuations,

Question 17

Comparing incomes across countries based on per capita GNP figures that have been converted to dollars using the exchange rate

A) is considered to be the best way to compare living standards across countries.
B) is a method of comparison that takes into account unequal distribution of income in a country.
C) accurately reflects differences in purchasing power across countries.
D) may not accurately reflect differences in purchasing power across countries.

Question 18

In 2000, the international community adopted and concretely specified developments goals, the progresses of which are to be monitored by the World Bank. Of the goals included here, which goal is least likely to be achieved by their target dates, mostly 2015?

A) Reducing the absolute poverty rate by half
B) Increasing primary school enrolment
C) Promoting gender equality
D) Reducing deaths from measles and AIDS

Question 19

The World Bank, an international organization designed to support economic development, classifies countries according to their levels of per capita gross national income. Countries with per capita incomes of $11,456 or more in 2007 were classified as

A) industrialized countries.
B) advanced developed countries.
C) high-income countries.
D) western industrialized countries.

Question 20

Which of the following characterize low-income nations, compared to middle-income and high-income countries?
I. higher rates of population growth
II. higher rates of migration from rural to urban sectors
III. higher unemployment in the rural sector compared to the urban sector
IV. lower level of potential output
V. higher rates of unemployment

A) all of the above
B) I, II, IV, and V only
C) I, II, III, and IV only
D) I, III, IV, and V only

Question 21

The Gender Development Index (GDI)

A) measures the percentage of women who are illiterate and living in poverty.
B) uses the same variables as the Human Development Index but adjusts them downward to take into account the extent of gender inequality.
C) measures the extent of income inequality between households headed by males and households headed by females.
D) measures the difference in educational attainment between males and females.

Question 22

The process that produces sustained and widely shared gains in per capita GDP is called

A) economic growth.
B) economic transition.
C) economic development.
D) economic advancement.

Question 23

Over a 10-year period, country A has real GDP and population growth rates of 5% and 7%, respectively; country B has real GDP and population growth rates of 3% and 1%, respectively. All other things unchanged, per capita real GDP has increased

A) more in country A.
B) more in country B.
C) about the same in both countries.
D) in neither country.

Question 24

Which of the following statements is true about the agricultural sector in low-income nations?

A) The agricultural sector has been decreasing in size because its productive workers prefer to migrate to urban areas.
B) The agricultural sector is by far the largest producer and the most productive sector in low-income countries.
C) Although the agricultural sector is the largest employer, labor's productivity in this sector is very low.
D) The agricultural sector has been increasing in size and in terms of labor productivity as rural farmers increasingly start to mechanize.

Question 25

In recent years, the United Nations has constructed measures incorporating dimensions of economic development that go beyond the level of per capita GDP. These measures include
I. United Nations Standard of Living Index.
II. Human and Real Growth Index.
III. Human Development Index.
IV. Human Poverty Index.

A) all of the above
B) II, III, and IV only
C) II and III only
D) III and IV only

Question 26

The United Nations has constructed a measure of economic development that goes beyond per capita GDP called the

A) United Nations Standard of Living Index.
B) Human and Real Growth Index.
C) Human Development Index.
D) UN Growth and Development Index.

Question 27

What is the difference between economic growth and economic development?

A) Economic growth examines qualitative changes in the processes by which potential output increases over time, whereas economic development examines how a country moves from one point on its production possibility curve to another point on the curve.
B) Economic growth implies qualitative changes in productive processes whereas economic development requires quantitative change in virtually every aspect of life.
C) Economic growth implies quantitative changes in productive processes whereas economic development requires widespread structural changes in the way people live.
D) There is no difference between the two terms.

Question 28

Figure 19-1
Refer to Figure 19-1. The 20% of households with the lowest incomes in Cote d'Ivoire have

A) the same share of their country's total income as the poorest 20% of households in Guinea have.
B) a larger share of their country's total income than the poorest 20% of households in Guinea have.
C) a smaller share of their country's total income than the poorest 20% of households in Guinea have.
D) a larger share of their country's total income than the richest 20% of households in Guinea have.

Question 29

A country's rate of real GDP growth is 7% per year. If real GDP per capita increases by 3%, at what rate is its population changing?

A) Population has increased by 10%.
B) Population has increased by 4%.
C) Population has decreased by 2.33%.
D) Population has decreased by 4%.

Question 30

Economic growth implies

A) qualitative changes in productive processes, whereas economic development requires quantitative changes in productive processes.
B) outward shifts of the production possibilities curve over time, whereas economic development requires movement from a point inside a curve to a point on the production possibilities curve.
C) widespread structural changes in the way people live, whereas economic development requires quantitative changes in productive processes.
D) quantitative changes in productive processes, whereas economic development requires qualitative change in virtually every aspect. of life

Question 31

In addition to purchasing-power-adjusted per capita real GDP, the Human Development Index includes two dimensions related to the quality of life. What are these dimensions?

A) Life expectancy, educational attainment
B) Access to health care, nutrition
C) Life expectancy, infant mortality rate
D) Nutrition, life expectancy

Question 32

Economic development

A) examines the process by which a country's production possibilities curve shifts outward over time.
B) focuses on how countries can move toward their level of potential output and achieve widely shared gains in GDP per capita.
C) concentrates on how a country can increase its human capital and labor productivity to bring about changes in productive processes.
D) requires reductions in a country's population growth rate and at the same time, increases in real GDP.

Question 33

A country's rate of real GDP growth is 3% per year. Its population is growing 4% per year. At what rate is its real GDP per capita changing?

A) Real GDP per capita is increasing by 0.75%.
B) Real GDP per capita is increasing by 7%.
C) Real GDP per capita is decreasing by 1.33%.
D) Real GDP per capita is decreasing by 1%.

Question 34

Compared to the Lorenz curve for high-income countries, the Lorenz curve for developing countries generally

A) is about the same.
B) lies closer to the axes.
C) lies closer to the 45-degree line.
D) crosses the 45-degree line.

Question 35

In recent years, the United Nations has constructed measures incorporating dimensions of economic development that go beyond the level of per capita GDP. These measures include
I. Gender Development Index.
II. International Standard of Living Index.
III. Human Development Index.
IV. Human Poverty Index.

A) all of the above
B) I, II, and IV only
C) I, III, and IV only
D) II, III, and IV only

Question 36

The United Nations' Human Development Index does not include

A) life expectancy.
B) educational attainment.
C) purchasing-power-adjusted per capita real GDP.
D) an adjustment for gender inequality.

Question 37

Figure 19-1
Refer to Figure 19-1. Based on the Lorenz curves, which of the two countries do you believe fits better the definition of development?

A) Cote d'Ivoire, because its low income households have a higher per capita real GDP than low income households in Guinea.
B) Guinea, because there are more high-income households in Guinea than in Cote d'Ivoire.
C) Cote d'Ivoire, because its income distribution is comparatively more equal than Guinea's which suggests that Cote d'Ivoire is coming closer to generating widely shared gains in per capita real GDP.
D) Guinea, because its income distribution is comparatively more equal than Cote d'Ivoire's which suggests that Guinea is coming closer to generating widely shared gains in per capita real GDP.

Question 38

Economic development is the process by which a nation's _______ increases and is widely shared by the population over a long period of time.

A) real total output
B) real total income
C) per capita real GDP
D) per capita nominal GDP

Question 39

The text defines economic development as

A) a sustained increase in real GDP per person.
B) an increase in the general standard of living resulting from the real process of economic growth.
C) a process that produces sustained gains in per capita GDP.
D) a process that produces sustained and widely shared gains in per capita real GDP.

Question 40

The gender development index (GDI)

A) is an index that quantifies economic participation and decision-making by women.
B) measures the differences between female and male participation in various sectors of economic productivity.
C) measures how HYPERLINK "http://www.nationmaster.com/graph/eco_hum_dev_ind" human development indices for longevity, knowledge, and standards of living are differentiated by gender.
D) measures the share of a country's GDP that is produced by females and female-headed business.

Question 41

The Kuznets hypothesis, discussed in the Case in Point titled "(Growth and Development) or (Growth or Development)," argued that at low levels of per capita income, increases in income would likely

A) increase income inequality in developing countries.
B) reduce income inequality in developing countries.
C) increase the rate of structural change in developing countries.
D) reduce the rate of structural change in developing countries.

Question 42

Between 1965 and 1980, the world population grew at an annual rate of 2%. Using the rule of 72, population is expected to double in

A) 144 years.
B) 36 years.
C) 24 years.
D) 18 years.

Question 43

Simon Kuznets hypothesized that at low levels of per capita income, increases in income would lead to increases in income inequality because

A) in less developed countries, the rich are able to save and invest and therefore enrich themselves, while the poor remain at essentially the same economic level.
B) structural changes that often accompany early growth, such as rural-urban migration, occupational changes, and environmental degradation, disproportionately hurt poorer people.
C) growth enhancing policies tend to favor middle-income and high-income households rather than poor households.
D) development processes tend to be concentrated in the manufacturing sector and not in work in the agricultural sector which employs mostly low-income people.

Question 44

The Human Poverty Index (HPI), measures human deprivation and includes all of the following indicators except

A) the percentage of people expected to die before age 40.
B) the percentage of underweight children under age 5.
C) the percentage of adults who are illiterate.
D) the percentage of households headed by women.

Question 45

What is the fundamental argument in Malthus' An Essay on the Principle of Population?

A) Ultimately, population growth rate would outpace growth in real GDP leading to declining standards of living.
B) Population growth tends to undermine global stability which is a stimulus for future wars and conflicts.
C) Population would increase at a geometric rate and the food supply at an arithmetic rate and that this disharmony would lead to forced return to HYPERLINK "http://en.wikipedia.org/wiki/Subsistence" \o "Subsistence" subsistence-level conditions.
D) Population growth is the root cause of hunger, poverty, environmental destruction, disease, and social unrest.

Question 46

Which of the following statements is true about the process of demographic transition?

A) Demographic transition is complete in the world's low-income countries.
B) Demographic transition is complete in high-income countries.
C) Demographic transition is not complete in high-income countries.
D) Demographic transition is complete in high-income European countries but not in high- income Asian countries.

Question 47

The Malthusian population theory

A) was eventually dismissed for its pessimism and failure to take into account technological advances in agriculture and food production.
B) failed because contrary to Malthus' argument, agricultural production is not subject to diminishing returns.
C) was not borne out in low-income countries because "population checks" (war, famine, etc.) kept population growth down while real GDP growth increased.
D) states that the root cause of underdevelopment is unchecked population growth.

Question 48

In 1798, An Essay on the Principle of Population was written by

A) Adam Smith.
B) Thomas Malthus.
C) Karl Marx.
D) David Ricardo.

Question 49

Which of the following explain why the Malthusian trap did not occur?
I. rising agricultural productivity
II. increases in the amount of capital per worker
III. slower population growth worldwide
IV. slower population growth in high-income countries

A) all of the above
B) I and II only
C) I, II, and III only
D) I, II, and IV only

Question 50

The Malthusian trap refers to

A) the point at which natural population checks such as disease and famine have kept population growth below its replacement rate.
B) the point at which scarce natural resources have been depleted.
C) the point at which the world is no longer able to meet food requirements of its population.
D) the low-level equilibrium an economy is stuck at because productive resources have been exhausted.

Question 51

Empirical data on population growth and growth in real per capita GDP for more than 100 developing countries show that
I. in most countries, agricultural production declined while population growth increased, leading to starvation and malnutrition.
II. some countries had relatively rapid population growth, and had a rapid increase in per capita real GDP.
III. many countries experienced both rapid population growth and negative changes in per capita real GDP.

A) I only
B) III only
C) I and III only
D) II and III only

Question 52

Demographic transition is a process in which population growth

A) falls with a rise in death rates and then rises with a reduction in birth rates
B) rises with a rise in death rates and then falls with an increase in death rates
C) rises with a fall in death rates and then falls with a reduction in birth rates
D) falls with a fall in death rates and then rises with an increase in death rates

Question 53

Malthus' predictions do not match the experience of Western societies because his An Essay on the Principle of Population failed to take into account

A) gains in output that could be achieved through increased use of capital.
B) the more accurate relationship between population growth and income, which is that higher incomes tend to reduce the rate of population growth.
C) dramatic decreases in productivity over time as labor moved out of the agricultural sector.
D) increases in the supply of labor.

Question 54

The demographic transition refers to a shift from a period of

A) declining food output per worker to a period of rising food output per worker due to advancements in agricultural technology.
B) rising population caused by falling death rates to a period of stable population caused by a matching reduction in birth rates.
C) rising infant mortality rate to a period of rising infant mortality rate caused by improved nutrition.
D) rising population in the agricultural sector to a period of falling population in the agricultural sector caused by rural-urban migration.

Question 55

The greater the difference between the Human Development Index and the Gender Development Index of a country,

A) the greater the disparity in achievement between males and females in the country.
B) the greater a country's ability to bridge the disparity in achievement between males and females.
C) the smaller the disparity in achievement between males and females in the country.
D) the greater the disparity in poverty experienced by the population in general and poverty experienced by households headed by women.

Question 56

The Gender Development Index is expressed as a value between 0 and 1. Consider two countries, Country A which has a GDI of 0.968 and Country B which has a GDI of 0.336. Which of the following statements is true?
I. There is a greater disparity in achievement between males and females in Country A than in Country B.
II. There is a greater disparity in achievement between males and females in Country B than in Country A.
III. The rate of illiteracy among women is likely to be lower in Country A than in
Country B.
IV. The rate of illiteracy among women is likely to be lower in Country B than in
Country A.

A) I only
B) II only
C) I and III only
D) I and IV only

Question 57

Which of the following statements is true about population growth rates?

A) Overall, the rate of population growth has decreased sharply among high-income nations, and increased modestly among low-income nations.
B) Overall, the rate of population growth has decreased sharply among rich and middle-income people, and increased modestly among poor people.
C) Overall, the rate of population growth has decreased sharply among the wealthy but has increased among middle- and low-income people.
D) Overall, the rate of population growth has slowed modestly among nations at all income levels.

Question 58

Based on the work of Thomas Malthus, the graph of food production over time would be represented by

A) an upward-sloping straight line and the graph of food required would be represented by an upward-sloping straight line with a greater slope.
B) an upward-sloping straight line and the graph of food required would be represented by an upward-sloping straight line with a lesser slope.
C) an upward-sloping straight line and the graph of food required would be represented by an upward-sloping curved line.
D) an upward-sloping curved line and the graph of food required would be represented by an upward-sloping straight line.

Question 59

Which of the following is a flaw in Malthus' population theory?

A) His belief that growth in real GDP cannot exceed population growth real GDP despite technological advancements.
B) His belief that any increase in income would boost population growth failed to take into account the fact that higher incomes increase this opportunity cost and therefore reduces the number of children people want.
C) Rising incomes makes it more affordable for families to have more children and to educate their children so that they become productive members of society.
D) He failed to take into account that over time, as countries develop, the agricultural industry shrinks, reducing the need for people to have large families to help out in the family farm.

Question 60

In general, economists believe that

A) economic growth has a greater impact on people's welfare in high-income countries than in low-income countries.
B) in low-income countries, economic growth makes rich people richer and poor people poorer.
C) economic growth makes most people, including most poor people, better off.
D) economic growth worsens income inequality in the short-run but is successful at redistribution in the long run.

Question 61

Roads, telephone lines, power facilities, and schools are examples of a nation's

A) technostructure.
B) infrastructure.
C) physiostructure.
D) sociostructure.

Question 62

Which of the following is prerequisite of successful market economies?

A) The existence and enforcement of property rights
B) A tax system that redistributes income from the rich to the poor
C) The ability of the government to appropriate economic profits beyond a certain amount to ensure equality in income distribution
D) A military presence to ensure political freedom

Question 63

All of the following are consequences of China's "one-child family" policy except

A) Local officials in charge of monitoring births may have an incentive to underreport the number of births to avoid punishment by the government.
B) China's cultural preference for sons has led to a large number of incidences of female infanticide.
C) China's policy succeeded in lowering its birth rate and, despite the absolute size of its total population, led to a net decrease of its population.
D) There were political consequences: the United States, as well as many other countries, have publicly expressed their disapproval with Chinese leaders for their sterilization policies.

Question 64

The proposal to provide different and special treatment in international trade to developing nations is espoused by adherents to the

A) neo-classical growth theory.
B) preferential trade theory.
C) convergence theory.
D) dependency theory.

Question 65

The World Bank predicts that world population growth during the 2005 to 2015 period will be

A) slower than growth during the 1965 to 1980 period, leading to a longer doubling time.
B) slower than growth during the 1965 to 1980 period, leading to a slower doubling time.
C) faster than growth during the 1965 to 1980 period, leading to a longer doubling time
D) faster than growth during the 1965 to 1980 period, leading to a shorter doubling time

Question 66

Which of the following is an obstacle poor countries face in seeking development finance funds from foreign savers?

A) Governments of many rich countries impose restrictions on capital flows to poor countries.
B) Many poor countries impose restrictions on the inflow of foreign funds.
C) The difficulty of repaying loans denominated in foreign currency.
D) The difficulty of taxing the interest income earned by foreigners on loans to poor countries.

Question 67

Which of the following is required for a country to successfully pursue an import-substitution strategy?

A) Imposition of protective tariffs
B) Policies to encourage foreign investment in order to facilitate rapid technology transfer
C) A flexible exchange rate system
D) A liberal immigration policy to increase the size of the labor force

Question 68

Dependency theory assumes that export industries in a poor country have small multiplier effects throughout the rest of the economy. Which of the following is a policy implication of this assumption?

A) Trade based on comparative advantage cannot benefit poor nations.
B) Governments of poor nations should take whatever steps are necessary to prevent the repatriation of profits earned by multinational corporations operating in their countries.
C) Production should be undertaken by the public sector and not the private sector.
D) These countries should pursue policies of self-reliance such as import-substitution policies rather than export-led policies.

Question 69

Advocates of dependency theory assert that

A) poor countries are hampered from participating in free trade because of a lack of transportation infrastructure.
B) the high rate of poverty in poor countries is attributed to underdeveloped markets and the lack of property rights.
C) trade based on comparative advantage benefits developed countries at the expense of poor countries.
D) the key reason why poor nations have been slow to industrialize is because of persistent misallocation of resources.

Question 70

In 1974, the poorest nations among the developing nations introduced into the United Nations a Declaration on the Establishment of a New International Economic Order. What is the main idea of this program?

A) It called upon the less developed countries to cut ties with the HYPERLINK "http://www.answers.com//more-economically-developed-country" \t "_top" more economically developed countries, and follow self-reliant, socialist systems.
B) It called for greater commitment from rich nations to invest in infrastructure development in poor countries, otherwise the latter are doomed to remain economically disadvantaged.
C) It called upon the rich nations to help them reduce the growing gap in real per capita income levels between the developed and developing nations.
D) It called for developed nations to involve economic leaders of poor countries in the formers' decision making processes to facilitate a greater degree of knowledge transfer.

Question 71

All of the following contributes to economic development except

A) high saving and investment rates.
B) low population growth rate.
C) the existence of a market economy.
D) abundant exportable natural resources.

Question 72

All of the following are obstacles in a country's ability to rely on a general strategy of import substitution in its development efforts except

A) a shortage of managerial talent and skilled labor.
B) a corrupt bureaucracy.
C) a lack of capital goods.
D) a lack of natural resources.

Question 73

All of the following contributes to economic development except

A) high saving and investment rates.
B) low population growth rate.
C) the existence of a socialist economic system to ensure that a country's output is fairly distributed.
D) investment in infrastructure.

Question 74

A strategy of restricting imports and substituting domestic production of those goods is called

A) trade restraint strategy.
B) import substitution strategy.
C) trade blockage strategy.
D) export substitution strategy.

Question 75

One reason why low-income countries lack physical capital is

A) due to the lack of financial institutions where savers can deposit funds and earn interest on their funds.
B) that poor countries have a hard time generating much domestic savings, since living standards are so low.
C) because the bulk of savings is invested in military equipment to fight political unrest.
D) because of the high rate of corruption in government.

Question 76

The newly industrializing economies of the Pacific Rim that have experienced rapid economic growth include

A) North Korea, Burma, Vietnam, and Cambodia.
B) Japan, Thailand, Laos, and New Zealand.
C) Malaysia, Philippines, Indonesia, and China.
D) South Korea, Taiwan, Singapore, and Hong Kong.

Question 77

Dependency theory posits that

A) the lack of free trade between developed countries and poor countries has hurt the poor countries.
B) the cause of the low levels of development in poor countries is caused by their reliance and dependence on developed countries.
C) all countries follow the same predetermined paths to development, starting from import substitution strategy to export-led growth.
D) rich nations that are not endowed with natural resources are dependent on poor resource-rich countries for the former's consumption goods.

Question 78

Which of the following is a common of feature of economies such as South Korea, Taiwan, Hong Kong, Singapore, Chile that have achieved significant gains in economic growth?

A) Abundant exportable natural resources
B) The existence of a market economy
C) A low degree of government involvement in the provision of housing, health care, and education
D) Heavy reliance on foreign investments

Question 79

China is an example of a country that has achieved a very low rate of population growth and a very high rate of growth in per capita GNP. Which of the following policies did the Chinese government adopt to bring about this dramatic drop in the population growth rate?
I. The government started and enforced a "one-child family" policy which included mandatory birth control and forced sterilization.
II. Couples who opted to have only one child were rewarded with special benefits such as compensation for mothers who follow China's birth policies.
III. Couples who opted to have more than one child were dealt punishments such as fines, loss of employment and confiscation of property.

A) I only
B) II only
C) I and III only
D) I, II, and III

Question 80

Economic systems that have achieved the highest levels of development have been

A) market systems.
B) centrally planned systems.
C) socialist systems.
D) command economies.