Deck 15: Finance and Fiscal Policy for Development 

Question 1

Compare and contrast the workings of the organized and unorganized money markets in developing countries.

Answer 1

Discussed in the chapter,section 15.1.

Question 2

Explain how group lending works.

Answer 2

Discussed in the chapter,15.3.

Question 3

Discuss the pros and cons of the recent introduction and expansion of stock markets in the developing countries.

Answer 3

Discussed in the chapter,section 15.4.

Question 4

Compare and contrast the experience of Poland and Chile in their efforts at privatizing SOEs.Make sure you include a discussion of the background to the privatization,methods adopted and the outcomes of privatization in the two countries.

Question 5

How can joint liability lower the interest rate for micro borrowers.

Question 6

Among the rationales for state owned enterprises is
(a)existence of monopoly.
(b)the need for capital formation.
(c)desirability of national control over strategic sectors of the economy.
(d)all of the above.
(e)none of the above.

Question 7

What is meant by the term dynamic incentives in the context of making loans to micro borrowers.

Question 8

Among the benefits of privatization of state owned enterprises is
(a)increased employment.
(b)improved efficiency.
(c)reduced pollution.
(d)all of the above.
(e)none of the above.

Question 9

Why are women considered to be more credit worthy for micro loans?

Question 10

In what ways do the actual and potential roles of central banks differ between developed and developing countries?

Question 11

One of the characteristics of financial repression is
(a)negative real interest rates.
(b)lack of credit rationing.
(c)capital flowing to the highest rate of return.
(d)all of the above.
(e)none of the above.

Question 12

A development bank
(a)accepts deposits from the poor.
(b)makes loans for industry expansion.
(c)is an agency such as the World Bank.
(d)all of the above.
(e)none of the above.

Question 13

Does it matter how much a developing country saves? Explain why or why not.Discuss theoriesand evidence on whether developing countries can increase the net savings rate in the economy through public policy.In particular,consider whether this can be accomplished through increasedor decreased taxation of one or more types,and increased or decreased government spending ofone or more types.

Question 14

What are the major market failures that imply a potential role for state intervention in financial markets?

Question 15

What are some of the major characteristics of financial repression? To what degree may financial liberalization be expected to address the issue of inadequate saving?

Question 16

Describe the costs and benefits of privatization of state-owned enterprises.In which cases would privatization seem most advisable?

Question 17

What are the key elements that need to be considered in developing an optimal sequence of financial sector liberalization? Will the order differ across countries? Why or why not?

Question 18

Why do NGOs target women borrowers while making micro loans?

Question 19

Among the rationales for state owned enterprises is
(a)that the private sector is inefficient.
(b)that there is unemployment of capable managers.
(c)desirability of national control over strategic sectors of the economy.
(d)all of the above.
(e)none of the above.

Question 20

Explain how the Grameen bank has helped address the problem of poverty while minimizing the risk of default?

Question 21

When it comes to the composition of tax revenues from different sources,
(a)developing countries derive the largest portion of their revenue from income taxes and developed countries from consumption taxes.
(b)developing countries derive the largest portion of their revenue from consumption taxes and developed countries from income taxes.
(c)both developing countries and developed countries derive the largest portion of their revenue from income taxes.
(d)both developing countries and developed countries derive the largest portion of their revenue from consumption taxes.

Question 22

Macroeconomic stabilization involves
(a)reduction of inflation.
(b)reduction of government budget deficits.
(c)reduction of trade deficits.
(d)all of the above.
(e)none of the above.

Question 23

Currency substitution means
(a)use of money instead of barter.
(b)use of countertrade instead of money.
(c)use of foreign exchange instead of domestic currency.
(d)all of the above.
(e)none of the above.

Question 24

In 1995-7,tax revenue as a percent of GDP
(a)was roughly equal between developing and developed countries.
(b)was a few percentage points higher for developed than for developing countries.
(c)was a few percentage points lower for developed than for developing countries.
(d)was much higher (approximately double)for developed countries than for developing countries.
(e)was much higher (approximately double)for developing countries than for developed countries.

Question 25

Which of the following is an objective of macroeconomic stabilization?
(a)eliminating current account deficits.
(b)controlling inflation.
(c)restoring fiscal balance.
(d)all of the above.