Deck 19: Economic Development

Question 1

Compared to industrial market countries,developing countries usually have:

A)exports consisting mostly of agricultural products and raw materials.
B)slower population growth.
C)lower unemployment rates.
D)low rates of illiteracy.
E)high standard of living.

Answer 1

exports consisting mostly of agricultural products and raw materials.

Question 2

The yardstick most often used to compare living standards across nations is:

A)the average production cost per unit.
B)the sales revenue per month for all the firms in an economy.
C)utility per capita.
D)the output per capita.
E)the volume of imports per year.

Answer 2

the output per capita.

Question 3

The primary factor that contributes to more than half of the deaths of children under the age of 5 in low-income countries is _____.

A)female genocide
B)nuclear radiation
C)malnutrition
D)yellow fever
E)the H1N1 virus

Answer 3

malnutrition

Question 4

Which of the following is not true of the World Bank?

A)It is an economic development institution
B)It is affiliated with the United Nations
C)It offers low-fee checking accounts to anyone in the world
D)It estimates output per capita figures
E)It uses output per capita figures to classify economies

Question 5

_____ is one of the clearest ways of distinguishing between industrial and developing countries.

A)The interest rate
B)The birth rate
C)The enrolment rate
D)The number of skyscrapers
E)The composition of the population

Question 6

In some developing countries,the standard of living,as measured by per capita income,has declined because:

A)the population growth rate has exceeded the growth rate in total production.
B)the growth rate in total production has exceeded the population growth rate.
C)the infant mortality rate has exceeded the total growth rate.
D)the inflation rate has exceeded the total growth in production.
E)the growth rate in total production is not as high as the targeted growth rate.

Question 7

Which of the following is likely to be a characteristic of a developing economy?

A)A high rate of illiteracy
B)A low rate of growth of population
C)A high rate of economic growth
D)The export of manufactured goods
E)The efficient use of labor

Question 8

Which of the following regions has the lowest life expectancy at birth?

A)Continental European countries
B)The Baltic countries
C)The Nordic countries
D)Sub-Saharan African countries
E)Middle Eastern countries

Question 9

A trend in developing countries is that:

A)the birth rate during a typical woman's lifetime has increased from three to six children.
B)attitudes toward family size are changing.
C)fertility rates increase when women have employment opportunities outside the home.
D)women earn less as they become better educated.
E)women tend to have fewer children if they are less educated.

Question 10

The WHO cites _____ as the biggest single threat to the world's public health.

A)malnutrition
B)female genocide
C)nuclear radiation
D)yellow fever
E)the H1N1 virus

Question 11

The World Bank classifies countries into the three following major groups:

A)high-income economies,middle-income economies,and low-spending economies.
B)high-spending economies,middle-spending economies,and low-spending economies.
C)super-high-income economies,middle-income economies,and low-income economies.
D)high-income economies,middle-income economies,and zero-income economies.
E)high-income economies,middle-income economies,and low-income economies.

Question 12

_____ was one of the first countries to experience long-term economic growth during the 19^th century.

A)New Zealand
B)India
C)Cambodia
D)Iran
E)Syria

Question 13

The World Bank estimates GNI per capita and then adjusts figures across countries based on _____.

A)the population rate in each country
B)the unemployment rate in each country
C)the purchasing power of the income in each country
D)the inflation rate in each country
E)the consumer price index in each country

Question 14

Developing countries have higher birth rates because:

A)families with more children have higher levels of income.
B)children are viewed as economic and social security as parents age.
C)the opportunity cost of leisure for people in developing countries is less.
D)there are special government programs that encourage more children per family.
E)the infant mortality rate is low in developing countries.

Question 15

Which of the following is true about the GNI of the United States?

A)It includes profits earned by a Mercedes factory in Alabama.
B)It excludes profits earned by General Electric in India.
C)It includes profits earned by a Ford factory set up in Chennai.
D)It stands for General Native Income.
E)It is the difference between the value of U.S.exports and imports.

Question 16

Developing countries consist of:

A)only low-income countries.
B)only middle-income countries.
C)both low-income and middle-income countries.
D)all industrial countries.
E)both industrial and middle-income countries.

Question 17

Which of the following countries has the highest infant mortality rate?

A)Japan
B)The Congo
C)The United States
D)Norway
E)Germany

Question 18

In developing countries,farm productivity is low because _____.

A)half of the labor force is involved in industrial activities
B)half of the labor force is involved in the service sector
C)more than half of the population consists of old people
D)farming methods are generally primitive.
E)people prefer leisure over working

Question 19

Which of the following groups of countries has the highest incidence of HIV/AIDS?

A)Continental European countries
B)The Baltic countries
C)The Nordic countries
D)Sub-Saharan African countries
E)Middle Eastern countries

Question 20

​Industrial market countries are also referred to as:

A)developing countries.
B)low-income economies.
C)middle-income economies.
D)transitional economies.
E)high-income economies.

Question 21

Which of the following leads to an inefficient use of labor?

A)Underemployment
B)A high rate of economic growth
C)Overemployment
D)A high rate of growth of income
E)A high rate of inflation

Question 22

One likely reason that the country of Arctura is poor is that it:

A)does not produce many goods and services.
B)has a low unemployment rate.
C)has a low birth rate.
D)enjoys a low infant mortality rate.
E)has a high literacy rate.

Question 23

Japan's remarkable economic growth in the 20^th century was a result of _____.

A)heavy imports of primary products from South Asian countries.
B)a growth in education,leading to a ready acceptance of technology.
C)a rise in the price of oil as Japan is an oil-rich country
D)migration of workers from Japan.
E)an increase in employment in the agricultural sector.

Question 24

If Eddie Li is a skilled worker employed in a low-skill job,he is:

A)underemployed.
B)unemployed.
C)overemployed.
D)fully employed.
E)a discouraged worker.

Question 25

Gloria,who lives in a developing country,is likely to:

A)be less educated than most men in her country.
B)be a graduate and her brother is likely to be a school dropout
C)have more employment opportunities and earn higher wages than her male classmates.
D)work long hours on her farmland.
E)have special access to resources such as land,capital,and technology.

Question 26

Which of the following is true of the poorest countries of the world?

A)Children make up less than one-fifth of the population.
B)There are more people over the age of 65 than under the age of 15.
C)Children under the age of 15 make up nearly half the population.
D)Fertility rates are very low compared to industrial countries.
E)The growth rate in total production generally exceeds the population growth rate.

Question 27

Evidence from developing countries suggests that fertility rates decline when _____.

A)households are headed by women
B)the composition of children in the population exceeds the young adults
C)households are headed by men
D)literacy among women declines
E)women have employment opportunities outside their home.

Question 28

Which of the following is true?

A)In low-income countries,less than 5 percent of those 15 and older were illiterate in 2007.
B)In middle-income countries,17 percent of those 15 and older were illiterate in 2007.
C)In high-income countries,38 percent of those 15 and older were illiterate in 2007.
D)Education bears little relationship to economic development in high-income countries.
E)Education is more important to the economic development of low-income countries than it is to high-income countries.

Question 29

Which of the following is a consequence of low income?

A)More hard work and lower labor productivity
B)More investment in human capital
C)More savings and less consumption
D)More hard work and higher labor productivity
E)Less savings and less investment

Question 30

Which of the following is true of the agricultural sector in developing countries?

A)A very small percentage of labor force is employed in agriculture.
B)Farm productivity is usually very low.
C)It relies heavily on technology.
D)It does not contribute to the exports of the countries.
E)It accounts for a high percentage of the national income.

Question 31

Labor productivity depends on:

A)the effectiveness of government.
B)the size of the economy.
C)the proportion of the labor force that is unionized.
D)the amount of natural resources.
E)the risks taken by an entrepreneur.

Question 32

Underemployment occurs:

A)when skilled workers are employed in low-skill jobs.
B)when workers willing and able to work cannot find a job.
C)when workers drop out of the labor force in frustration.
D)only when a country adopts an export-promotion strategy.
E)only when a country adopts an import-substitution strategy.

Question 33

Labor productivity depends on:

A)the effectiveness of government.
B)the amount of capital available in an economy.
C)the proportion of the labor force that is unionized.
D)the size of an economy.
E)the size of the labor force in an economy.

Question 34

The average value added per U.S.farm worker is about _____ times that of farm workers in low- and middle-income countries.

A)two
B)fifteen
C)ten
D)seventy-five
E)five

Question 35

Workers are less productive in poor countries because:

A)the wealthy minority invests in stable foreign economies.
B)the government invests in stocks and bonds.
C)more than half of the population consists of people above 65 years of age.
D)they prefer leisure over work.
E)the government provides for unemployment benefits that make workers less willing to work.

Question 36

Labor productivity depends on:

A)the quality of labor.
B)the volume of imports.
C)the size of an economy.
D)the volume of exports.
E)the proportion of the labor force that is unionized.

Question 37

People can make better use of resources if they _____.

A)have inherited family wealth
B)are living in developed countries
C)are a part of the government
D)are educated
E)have invested in stocks and bonds in other nations

Question 38

Poverty can impose a special hardship on women because:

A)they contribute more to GDP than men.
B)they have more employment opportunities compared to men.
C)they are generally more educated than men.
D)they have to work in their homes as well as in the labor market.
E)they have a higher productivity than men.

Question 39

The country of Yipi can raise its productivity by investing more in:

A)both human and physical capital.
B)human capital only.
C)physical capital only.
D)stable foreign economies.
E)stocks and bonds rather than physical assets.

Question 40

Unemployment occurs when _____.

A)people do not work because they are not happy with the work environment
B)people are unwilling to work at the prevailing market wage rate.
C)people prefer leisure over work
D)people do not work because they are physically unable to work
E)people are willing and are able to work,but cannot find jobs

Question 41

Many developing countries were once under colonial rule,a system of government that:

A)offered the local population large opportunities to develop entrepreneurial skills.
B)offered the local population fewer opportunities to develop entrepreneurial skills.
C)did not offer any opportunity to the local population to develop entrepreneurial skills.
D)believed in a free-market economy.
E)offered immigrants opportunities to become entrepreneurs.

Question 42

One measure of banking presence in a nation is _____.

A)the amount of credit provided by banks to that nation's agricultural sector
B)the amount of savings that the banks set aside to meet its daily withdrawal needs.
C)the credit given out by banks to that nation's service sector
D)the total profit of the banking sector
E)the credit provided by banks as a percent of that nation's total output

Question 43

A primary requirement for development is:

A)government control over the production of essential consumer products.
B)government control over the distribution of natural resources.
C)a high confidence in foreign currency.
D)a low and predictable inflation rate that encourages saving.
E)printing money to finance a large proportion of public outlays.

Question 44

Which of the following countries has a limited stock of natural resources?

A)United Arab Emirates
B)Chad
C)Qatar
D)Kuwait
E)Bahrain

Question 45

Most developing countries are in trouble whenever oil prices rise because _____.

A)they are the major exporters of oil and their export income falls
B)it causes political instability in the countries
C)it causes an increase in frictional unemployment
D)higher oil prices drain the developing countries of foreign exchange
E)it causes deflation in domestic economies.

Question 46

Suppose the best and the brightest professionals of the country of Eronia migrate to Glassen for work.The upside of this brain drain is:

A)the remittances sent to Eronia.
B)the foreign aid sent to Eronia.
C)increase in gross domestic product of Eronia.
D)decreased labor supply in Eronia.
E)increased income inequality in Eronia.

Question 47

A problem for developing countries is that the prices of primary products fluctuate more widely than the prices of finished goods because:

A)crop supply changes very little despite the weather.
B)crop supply fluctuates with the weather.
C)weather never varies.
D)the demand for primary products fluctuates as new diets are developed.
E)the demand for primary products fluctuates with the weather.

Question 48

The bulk of exports from developed countries consists of:

A)manufactured goods.
B)education and technology.
C)agricultural products.
D)raw materials.
E)services like banking and insurance.

Question 49

Which of the following group of countries is most likely to have a high number of telephone lines per 1,000 people?

A)High-income industrial countries
B)Countries with high birth rates
C)Countries that import capital from abroad
D)Low-income countries
E)Middle-income countries

Question 50

In the event of a trade deficit,a developing country will most likely not cut imports of:

A)defense equipment.
B)services like insurance.
C)capital equipment.
D)food items.
E)electronic goods.

Question 51

Which of the following resources is necessary to efficiently combine other resources to produce goods and services?

A)Natural resources
B)Capital
C)Labor
D)Entrepreneurial ability
E)Financial institutions

Question 52

Inequality across households can be measured by looking at the share of national income:

A)going to the poorest fifth of the population.
B)going to the richest tenth of the population.
C)going to the poorest tenth of the population.
D)received by the richest half of the population.
E)received by the poorest half of the population.

Question 53

Dominik Rosen,the finance minister of the country of Glassen,has concluded that entrepreneurs are unable to generate the kind of growth the country needs.His decision to create state enterprises might be motivated by the desire to:

A)earn profit.
B)provide jobs for the friends and relatives of government officials.
C)take risks
D)encourage a free market.
E)limit government's role in the economy.

Question 54

The growth experiences of oil-rich countries indicate that _____.

A)a large supply of natural resources helps in the industrialization of the countries
B)natural resources are not enough to create a modern industrial economy
C)low productivity is a result of low income
D)unemployment and underemployment reflect inefficiencies of labor
E)education makes people more receptive towards new ideas and methods

Question 55

Developing countries need to trade with developed countries because:

A)developing countries need to adopt the advanced ways of living of the developed countries.
B)developing countries need the primary products that the developed countries export.
C)developing countries lack unskilled labor which they get from developed countries.
D)developing countries need technology and capital to increase productivity on farms,in factories,office,and in homes.
E)developing countries export capital to developed countries and increase their foreign exchange reserve.

Question 56

Which of the following is not true for banks in developing countries?

A)Banks are often viewed with suspicion.
B)Many bank depositors withdraw their funds at the first sign of economic problems.
C)Banks cannot make loans for extended periods because they cannot rely on a continuous supply of deposits.
D)If financial institutions fail to serve as intermediaries between savers and borrowers,the lack of funds for investment will make growth rates double.
E)The credit provided by banks as a percentage of total output is one-fifth of that in high-income countries.

Question 57

Laws,customs,conventions,and other institutional elements that sustain an economy fall under the category of:

A)the rules of the game.
B)human capital.
C)natural resources.
D)financial institutions.
E)capital infrastructure.

Question 58

The bulk of exports from developing countries is:

A)manufactured goods.
B)primary products.
C)services.
D)intermediate goods only.
E)capital equipment only.

Question 59

Which of the following is not true about migration?

A)Migration plays an important role in the economies of developing countries.
B)A major source of foreign exchange in some countries is the money sent home by migrants.
C)Migration provides a valuable safety valve for poor countries.
D)The best and the brightest professionals are very unlikely to migrate to developed countries.
E)Every year thousands of nurses migrate from countries such as Kenya and the Philippines to the United States.

Question 60

Developing countries:

A)do not benefit from foreign aid.
B)do not benefit from private investment.
C)generate less than half of their annual flow of foreign exchange from exports.
D)must acquire foreign exchange in order to pay for imports.
E)need to decrease labor productivity.

Question 61

Economists favor export promotion over import substitution as a policy for economic growth because:

A)it provides infant industries with a protected market.
B)it favors replacing high-cost foreign goods with low-cost domestic goods.
C)it improves the efficiency of foreign producers.
D)it emphasizes comparative advantage and trade expansion.
E)it emphasizes trade restrictions and helps provide a market for domestic goods.

Question 62

Which of the following is a reason for many developing countries to open their economies to free trade?

A)Domestic producers do not recognize their potential losses.
B)Customers do not recognize their potential gains.
C)The government lacks political will to remove impediments to development.
D)Consumers and firms are aware of the products and technology available abroad.
E)The potential winners from free trade remain largely unaware of the gains from trade

Question 63

Most U.S.aid has been coordinated by the:

A)United States Agency for International Development.
B)United Nations.
C)United States Treasury.
D)United States Agency for Foreign Intervention.
E)World Trade Organization.

Question 64

​Which of the following creates an obstacle to pursuing freer international trade?

A)Consumers do not recognize their potential gains.
B)Losses are widespread.
C)Domestic producers do not recognize their potential losses.
D)Government has plenty of political will and support to remove trade barriers.
E)Consumers can easily organize to demand free trade.

Question 65

Which of the following is a reason for the lack of political will to remove impediments to development from freer trade?

A)The potential losers fight reforms that might harm their livelihood.
B)Domestic producers do not recognize their losses.
C)Consumers are fully aware of their benefits from freer trade.
D)Losses from freer trade are widespread.
E)The government is unstable and therefore incapable of removing the trade barriers.

Question 66

A study by the World Bank suggests a strong link in Africa between governments that _____ special-interest groups and _____ rates of economic growth.

A)cater to;high
B)cater to;moderate
C)cater to;low
D)ignore;low
E)ignore;moderate

Question 67

Which of the following strategies emphasizes free trade?

A)Nationalization of industries
B)Promotion of exports
C)Higher export tariff
D)Higher import tariff
E)Higher quota restriction

Question 68

Which of the following is true of import substitution?

A)The government encourages domestic producers to make products which can compete in the international market.
B)The government takes steps to liberate imports and lift restrictions.
C)The government takes steps to promote exports and subsidizes export-oriented production.
D)The government insulates domestic producers by imposing strict tariffs and quotas.
E)The government focuses on service-oriented imports rather than primary imports.

Question 69

When a developing country relies on import substitution,_____.

A)it capitalizes on the gains from specialization and comparative advantage
B)it replaces high-cost domestic goods with low-cost foreign goods
C)domestic producers,shielded from foreign competition,usually become more efficient
D)other countries often retaliate with their own trade restrictions
E)it concentrates on producing only for the international market

Question 70

One of the drawbacks of implementing an import-substitution policy is that:

A)it makes other countries impose trade restrictions as a retaliatory measure.
B)it makes the economy vulnerable to global economic fluctuations.
C)it leads to brain drain,by which educated and knowledgeable resources are lost.
D)it increases the dependence on foreign capital goods for economic growth.
E)it increases the budget deficit of the domestic country.

Question 71

In some developing countries,different exchange rates apply to different categories of transaction,and therefore,_____.

A)the local currency is not easily convertible to foreign currency
B)the local currency is very easily convertible to foreign currency
C)the prices of foreign goods fluctuate widely in the domestic markets
D)the prices of domestic goods fluctuate widely in the foreign markets
E)domestic investors are more inclined to invest in foreign assets

Question 72

The country of Erbia can discourage foreign investment by:

A)requiring foreign investors to find a local partner who must be granted controlling interest.
B)setting the same exchange rates for different categories of transactions.
C)freely allowing private international borrowing and lending.
D)reducing government intervention in the market.
E)making consumers aware of the gains from freer trade.

Question 73

Any international transfer made on concessional terms for the purposes of promoting economic development is called:

A)foreign aid.
B)a unilateral transfer.
C)a coupon.
D)private investment.
E)a remittance.

Question 74

Which of the following groups is likely to lose from free trade?

A)Producers of an industry that has been protected from foreign competition
B)Consumers purchasing goods and services
C)Firms aware of the potential gain from free trade
D)Foreign producers buying quota rights to sell goods in the domestic market
E)Domestic producers importing raw materials for the production of manufactured goods

Question 75

One of the reasons that import substitution is popular is that:

A)it increases the quality of products.
B)infant industries would have to compete against global rivals.
C)it benefits suppliers of resources to the favored domestic industries.
D)it slows down the progression through the production chain.
E)the emphasis is on comparative advantage and trade expansion.

Question 76

The _____ argument was put forward as a rationale for protecting emerging domestic industries from foreign competition.

A)antidumping
B)infant industry
C)job and income
D)declining industries
E)national defense

Question 77

Which of the following is at the end of the production chain that a typical economy moves up along?

A)Raw materials
B)Agriculture
C)Hunting and gathering
D)Services
E)Manufacturing

Question 78

Which of the following correctly identifies the difference between export promotion and import substitution as approaches to economic growth?

A)Export promotion is based on the infant industry argument,while import substitution is based on the level playing field argument.
B)Export promotion requires more government intervention in the form of tariffs and quotas,while import substitution requires minimum government intervention.
C)Export promotion boosts domestic efficiency,while import substitution leads to inferior products being supplied by domestic producers and lowers efficiency.
D)Export promotion results in the replacement of low-cost foreign goods with high-cost domestic goods,while import substitution leads to the replacement of high-cost foreign goods with low-cost domestic goods.
E)Export promotion results in a decrease in the per capita GDP of a country,while import substitution results in an increase in the per capita GDP of a country.

Question 79

Most developing countries rely on foreign financing because:

A)their governments are unstable and run on deficits.
B)foreign financing is more reliable than domestic investments.
C)these countries do not generate enough savings to fund investments.
D)investors do not recognize their potential gains.
E)foreign countries are more than willing to invest in developing countries.

Question 80

When a developing country relies on export promotion,_____.

A)it concentrates on producing for its domestic market
B)it builds its technological and educational base and then makes complex products for export
C)domestic producers have sufficient protection to afford to become inefficient
D)its government must intervene more in markets
E)it begins with relatively simple products