Deck 20: Developing and Transitional Economies

Question 1

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

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

Answer 1

high-income economies,middle-income economies,low-income economies

Question 2

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

A) middle-income economies
B) low-income economies
C) high-income economies
D) Western European economies
E) all the world's economies

Answer 2

low-income economies

Question 3

Differences in stages of development among countries are reflected in a number of ways besides per capita income.

Answer 3

True

Question 4

In 2006,high-income economies with only about one eighth of the world's population produced more than half of the world's output.

Question 5

If the country of Zorg has a birth rate of greater than 2.2 births per woman,it is likely that Zorg is an industrial market country.

Question 6

Throughout the world,poverty is greater among women than men,particularly women who head households.

Question 7

There is a tremendous range in productive performance around the world.

Question 8

Which of the following is not a country that has more people over the age of 65 than under the age of 15?

A) Italy
B) Japan
C) Burundi
D) Germany
E) Portugal

Question 9

Which of the following is not a country or region most likely to be among industrial market countries?

A) Western Europe
B) North American
C) Australia
D) South Asia
E) Japan

Question 10

On average,more than half the labor force in developing countries works in agriculture,versus only about 3 percent in industrial market countries.

Question 11

Which of the following is a cause of higher birth rates in developing countries?

A) Children are viewed as a source of farm labor
B) Children are viewed as economic and social security as the parents age
C) Higher child mortality rates engender higher birth rates
D) All the answers are correct
E) None of the answers is correct

Question 12

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

A) middle-income economies
B) low-income economies
C) high-income economies
D) sub-Saharan African economies
E) all the world's economies

Question 13

Compared to industrial market countries,developing countries usually have

A) exports consisting mostly of agricultural products and raw materials
B) faster population growth
C) higher unemployment
D) higher rates of illiteracy
E) All of the answers are correct

Question 14

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

A) average production cost per unit
B) sales revenue per month
C) utility per capita
D) output per capita
E) imports per year

Question 15

Which of the following is true about GNP?

A) includes profits earned by a Mercedes factory in Alabama
B) excludes profits earned by General Electric in India
C) measures the market value of all goods and services produced by resources supplied the home country's residents and firms,regardless of the location of the resource
D) stands for Generally Nice Products
E) used by countries to classify the World Bank

Question 16

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) when women have employment opportunities outside the home,fertility rates increase
D) as women become better educated,they earn less
E) as women become less educated,they tend to have fewer children

Question 17

If Gloria is woman in a developing country,then it is likely that

A) she is less educated than most men in her country
B) her brother has dropped out of high school,but not she has graduated
C) she has more employment opportunities and earns higher wages than her male classmates
D) she and other women will not have to work long hours in agriculture
E) she has special access to resources such as land,capital,and technology

Question 18

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 19

Which of the following does not describe the World Bank?

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

Question 20

Which of the following groups has the lowest malnutrition rate among children less than 5 years of age?

A) middle-income economies
B) low-income economies
C) high-income economies
D) sub-Saharan African economies
E) all the world's economies

Question 21

Which of the following statements best serves as a summary of the other statements?

A) Low income can mean poor nutrition during the formative years,which can retard mental and physical development
B) Low income and low productivity may reinforce each other in a cycle of poverty
C) Low productivity obviously results in low income
D) Low income means less saving and less saving means less investment in human and physical capital
E) Poverty can result in less education,less capital formation,a poor diet,and little health care

Question 22

The country of Bananaland has an abundant supply of banana trees and therefore must be a modern industrial economy.

Question 23

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

A) one half
B) one
C) ten
D) fifty
E) five hundred

Question 24

Production and exchange depend on an reliable infrastructure of

A) transportation
B) communication
C) sanitation
D) electricity
E) All of the answers are correct

Question 25

Unemployment is measured primarily in urban areas because in rural areas farm work is usually an outlet for labor.

Question 26

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

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

Question 27

Labor productivity depends on the

A) quality of the labor
B) the amount of capital
C) the amount of natural resources
D) the amount of other inputs,such as technology
E) All of the answers are correct

Question 28

In developing nations,the combined rate of urban and rural unemployment or underemployment is about

A) 1 percent
B) 10 percent
C) 20 percent
D) 30 percent
E) 80 percent

Question 29

A requirement for development is

A) an unreliable system of financial institutions
B) a lack of saving by households and firms
C) low confidence in domestic currency
D) low and predictable inflation that encourages saving
E) None of the answers is correct

Question 30

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

Question 31

Education makes people more receptive t new ideas and methods,which leads to economic development.

Question 32

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

A) natural resources
B) capital
C) labor
D) entrepreneurial ability
E) financial institutions

Question 33

Sjen Mavago,the economics minister of the country of X-Marks-the-Spot,has concluded that entrepreneurs are unable to generate the kind of growth the country needs.Her decision to create state enterprises might be motivated by the desire to

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

Question 34

One likely reason that the country of Appleland is poor is that it

A) does not produce many goods and services
B) has highly educated and productive female workers
C) has a low birth rate
D) enjoys a low infant mortality rate
E) has a high literacy rate

Question 35

The group of countries more likely to have a high number of telephone lines per 1,000 people is

A) high-income countries
B) zero-income countries
C) infinite-income countries
D) low-income countries
E) middle-income countries

Question 36

In developing countries,it is not true that

A) banks are often viewed with suspicion
B) at the first sign of economic problems,many bank depositors withdraw their funds
C) because banks cannot rely on a continuous supply of deposits,banks cannot make loans for extended periods
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 percent of total output is one fifth that in high-income countries

Question 37

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) All the answers are correct

Question 38

Which of the following is not a developing country classified as a high-income economy because of possessing huge oil reserves?

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

Question 39

Which of the following is true?

A) In low-income countries,less than 5 percent of those 15 and older were illiterate during the period 2000 to 2004
B) In middle-income countries,10 percent of those 15 and older were illiterate during the period 2000 to 2004
C) In high-income countries,38 percent of those 15 and older were illiterate during the period 2000 to 2004
D) In the low-income economies of Burundi and Pakistan,about half of students complete ninth grade
E) In the middle-income economies of Brazil and Mexico,only about one quarter of students complete ninth grade

Question 40

Countries with reliable phone service have difficulty not only communicating,but also reaping the benefits of other technology advances,such as the Internet.

Question 41

Studies by the World Bank have underscored the successes of countries that have adopted trade liberalization policies.

Question 42

One of the reasons that import substitution is popular is that

A) there was never any demand for the products in question
B) infant industries would have to compete against global rivals
C) it benefits suppliers 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 43

If the country of Deficitland is experiencing trade deficits,they are more likely to cut imports of

A) beef
B) cocoa
C) coffee
D) capital goods
E) soybeans

Question 44

A World Bank study suggest 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 45

The country of Excludania can discourage foreign investment by

A) requiring foreign investors to find a local partner who must be granted controlling interest
B) setting different exchange rates for different categories of transactions
C) heavily restricting private international borrowing and lending
D) All the answers are correct
E) None of the answers is correct

Question 46

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 can make more complex products for export
C) domestic producers have sufficient protection that they can afford to become inefficient
D) its government must intervene more in markets
E) None of the answers is correct

Question 47

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

A) foreign aid
B) first aid
C) immigration
D) private investment
E) remittances

Question 48

The bulk of exports from industrial countries are

A) manufactured goods
B) primary products
C) agricultural goods
D) raw materials
E) raw sugar products

Question 49

Usually the poorest fifth of the population in a developing country receives more than 20 percent of the country's income.

Question 50

When a developing country relies on import substitution,

A) it sacrifices the gains from specialization and comparative advantage
B) replaces low-cost foreign goods with high-cost domestic goods
C) domestic producers,shielded from foreign competition,usually fail to become efficient
D) other countries often retaliate with their own trade restrictions
E) All of the answers are correct

Question 51

At the end of the production chain that a typical economy moves up along is

A) raw material
B) agriculture
C) hunting and gathering
D) services
E) manufacturing

Question 52

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 53

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 54

If there is a great deal of violence and uncertainty in the country of Crazico,people will be less willing to invest in their own future or in the future of Crazico.

Question 55

A problem for developing countries is that the prices of primary products fluctuate more widely than do 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) crops go in and out of fashion as new diets are developed
E) crop demand fluctuates with the weather

Question 56

Developing countries must confront industrial countries' trade restrictions,such as tariffs and quotas.

Question 57

Imagine that the best and the brightest professionals of the planet Venus migrate to Earth to work.The upside of this brain drain is

A) the remittances sent home to Venus
B) getting rid of snooty Venetians
C) not being able to afford the modern machinery that will help the Venetians become more productive
D) decreased labor supply on Venus
E) increased income inequality on Venus

Question 58

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 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 59

Export promotion has been more successful than import substitution.

Question 60

Social capital is

A) the shared values and trust that promote cooperation in the economy
B) the buildings and equipment used to produce goods and services
C) a government regulation aimed at improving health and safety
D) the accumulated knowledge,skill,and experience of the labor force
E) the owner's own or borrowed money invested in a business

Question 61

Which of the following can help shape the incentive structure of the country of Gammaland?

A) resource availability
B) prices
C) income
D) incentives
E) All of the answers are correct

Question 62

Which of the following does the country of Fuggedaboutit not have to be concerned about?

A) choosing a system of resource ownership
B) allocating resources
C) earning a profit for its owners
D) providing individual incentives
E) answering the three economic questions

Question 63

Disappointed with problems caused by being a recipient of foreign aid from donor governments,the country of Upsilon should consider

A) refusing all future offers of aid
B) privatizing of aid,such as receiving funds from private not-for-profit agencies
C) becoming a donor instead
D) seeking even more government-sponsored aid
E) All of the answers are correct

Question 64

Economic systems can be classified based on

A) the ownership of resources only
B) the ownership of resources,the types of crops grown,and the incentives used to motivate people
C) the way resources are allocated to produce goods and services and the incentives used to motivate people only
D) the ownership of resources,the way resources are allocated to produce goods and services,and the incentives used to motivate people
E) the ownership of resources,the way resources are allocated to produce goods and services,and the average education of workers

Question 65

How many countries in the world have failed to come up with the rules of the game that lead to sustained economic growth?

A) none
B) most
C) half
D) one
E) There is not enough data to answer this question

Question 66

The economic system that includes private ownership of most resources and the coordination of economic activity by price signals generated by market forces is

A) capitalism
B) socialism
C) communism
D) mercantilism
E) progressivism

Question 67

Which of the following is true about foreign aid provided by the United States?

A) During the last four decades,the U.S.has provided less than $400 million in aid
B) Most U.S.aid has been coordinated by the Department of Defense
C) The U.S.Agency for International Development emphasizes short-range plans
D) The U.S.Agency for International Development concentrates primarily on health,education,and agriculture
E) Foreign aid is large part of the U.S.federal budget

Question 68

A reliable system of property rights and enforceable contracts are prerequisites for creating incentives that support a healthy market economy.

Question 69

Around the world,once-socialist countries have replaced central plans with

A) foreign aid
B) budgets
C) special interests
D) markets
E) capital equipment

Question 70

A soft budget constraint applies when enterprises that earn profits distribute those profits to their private owners.

Question 71

Which of the following is not an example of an institution (rules of the game)?

A) formal rules of behavior
B) government takeover of private corporations
C) a constitution
D) informal constraints on behavior
E) traditions

Question 72

In the developing country of Sixsigma,most likely

A) resource owners tend to supply their resources where are most valued
B) almost all workers are employed in service industries
C) links to family or clan are totally unimportant
D) children are expected to choose occupations as different as possible from their parents' occupations
E) family businesses resist growth to avoid having to hire people from outside the family

Question 73

Foreign aid often becomes a source of discretionary funds that benefit poor people in developing countries and not the countries' leaders.

Question 74

When foreign aid is tied to purchases of low-priced food from the donor country,farm prices can drop in the developing countries,hurting poor farmers.

Question 75

A downside to foreign aid is that

A) developing countries have not necessarily increased their ability to become self-supporting at higher standards of living
B) many recipient countries are doing less of what they had done well
C) the agricultural sectors of recipient countries have suffered
D) government officials have been insulated from their own incompetence
E) All of the answers are correct

Question 76

Which of the following is not an example of foreign aid?

A) U.S.discount department stores purchasing toys from Chinese manufacturers
B) The International Monetary Fund extending loans to countries that have trouble with their balance of payments
C) The World Bank providing loans and grants to support health and education programs
D) The U.S.government paying to build an electricity plant in Albania
E) The Australian government paying to repair highways in Tonga

Question 77

In centrally planned economies,most prices are not

A) established by central planners
B) inflexible
C) set below the market-clearing level
D) based on consumer demand
E) the cause of shortages of supply

Question 78

Soft budget constraints will lead to

A) inefficiency
B) quick responses to changes in supply and demand
C) good investment decisions
D) high product quality
E) managers eager to satisfy consumer demand rather than production quotas

Question 79

Foreign aid can take the form of

A) only money,capital goods,or technical assistance
B) only capital goods,technical assistance,or food
C) money,capital goods,technical assistance,or food
D) only money,technical assistance,or food
E) only technical assistance or food

Question 80

Which of the following occurs when there was a shortage of supply in a centrally planned economy?

A) Central planners reduced the amount supplied to each sector
B) Shoppers waited in long lines at retail stores
C) Store shelves were empty
D) Shop operators expected "tips" or bribes for supplying scarce consumer goods
E) All of the answers are correct