Question 1

China is close to catching up with the United States in its standard of living as measured by per capita income.

Accepted Answer

China has experienced rapid economic growth, but its per capita income remains significantly lower than that of the United States, indicating a gap in the standard of living between the two countries.

Question 2

The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.

Accepted Answer

With a larger population, there is a greater demand for resources, which can lead to scarcity and higher prices. In addition, fast-growing populations can put pressure on existing infrastructure and social services, leading to lower quality of life and lower productivity. All of these factors can contribute to lower per capita incomes in developing countries.

Question 3

Recent efforts at providing direct cash transfers to poor individuals in DVCs have shown which of the following results?

Accepted Answer

Recent efforts at providing direct cash transfers to poor individuals in DVCs have shown positive early results. Studies have found that the majority of the recipients spent the money as intended, which has led to improved living conditions, increased school enrollment, and better health outcomes. However, it is important to note that the success of cash transfers may also depend on factors such as the amount and timing of the transfers, as well as the local economic and social context.

Question 4

The building of a new factory by a corporation would be an example of increasing the infrastructure in a developing nation.

Accepted Answer

Infrastructure typically refers to the fundamental facilities and systems serving a country, city, or area, including transportation and communication systems, utilities, and public institutions. A new factory built by a corporation is considered an investment in capital, not an increase in infrastructure.

Question 5

Land reform (or the reform of land ownership) is a relatively minor institutional obstacle to economic growth in many developing countries.

Accepted Answer

Land reform is actually a major institutional obstacle to economic growth in many developing countries. In many cases, unequal land distribution and insecure land rights for small farmers prevent them from investing in their land and improving agricultural productivity, which can lead to poverty and underdevelopment. Land reform can help address these issues by redistributing land to those who need it, providing legal recognition of land rights, and promoting secure land tenure.

Question 6

Developing nations tend to have a large entrepreneurial class but not sufficient capital investment.

Accepted Answer

The answer of Developing nations tend to have a large...

Question 7

An example of direct foreign investment would be the building of a motorcycle factory in China by Honda Motors.

Accepted Answer

Direct foreign investment refers to a company investing in and owning a business enterprise in a foreign country, such as Honda building a motorcycle factory in China.

Question 8

The gap in the standards of living between the IACs (like the U.S., countries of Western Europe, and Japan) and the DVCs of Africa, Latin America, and Asia have been narrowing significantly over the decades.

Accepted Answer

The statement is false. The gap between the IACs and DVCs has been widening over the years, with the IACs experiencing rapid economic growth while many DVCs continue to struggle with poverty and underdevelopment.

Question 9

The demographic transition view of population growth believes that slower population growth will lead to rising incomes.

Accepted Answer

The answer of The demographic transition view of population growth...

Question 10

The corruption and poor administration that are common to the public sectors of many DVCs suggest that government may not be very effective in promoting economic growth.

Accepted Answer

The statement suggests that government may not be effective in promoting economic growth due to corruption and poor administration in public sectors in many DVCs.

Question 11

The vicious circle of poverty implies that there is no way to break the circle; the poor nations will always remain poor.

Accepted Answer

While it can be difficult for poor nations to break the cycle of poverty, it is not impossible. There are examples of countries that have successfully managed to transition from poverty to prosperity through various strategies such as investing in education, infrastructure, and technology, promoting trade and economic growth, and reducing inequality.

Question 12

When technological advances are of the capital-using kind, it is possible for an economy to increase its productivity without any net investment in capital goods.

Accepted Answer

Technological advances of the capital-using kind typically require additional investment in capital goods to implement and utilize the new technology effectively, thus increasing productivity. Without this investment, the full potential of the technological advances cannot be realized.

Question 13

The richest 20 percent of the world's population receives more than 75 percent of the world's income, while the poorest 20 percent receives less than 2 percent of the world's income.

Accepted Answer

This is a commonly cited statistic among economists and global development organizations. It highlights the extreme income inequality that exists across the world.

Question 14

The vicious circle of poverty is based on the connections between low income, low saving, low investment, and low productivity.

Accepted Answer

The vicious circle of poverty is a theory that suggests that low income leads to low savings, which leads to low investment and low productivity, and ultimately back to low income. This creates a cycle that is difficult for individuals or countries to break out of without outside intervention.

Question 15

The creation of an adequate infrastructure in a nation is primarily the responsibility of the public sector.

Accepted Answer

The creation of public infrastructure, such as roads, bridges, airports, and public transportation, is a key responsibility of the public sector. While private sector investment may also be involved in the development of infrastructure, the government typically plays a central role in planning, financing, and maintaining these facilities to ensure they meet the needs of the population as a whole.

Question 16

In 2014, the IACs (industrially advanced countries) had an average per capita income that was about 60 times as high as that of the low-income nations.

Accepted Answer

According to World Bank data, in 2014, the high-income countries had an average per capita income of over $47,000 while the low-income countries had an average per capita income of under $780, resulting in a difference of approximately 60 times.

Question 17

Without an abundant endowment of natural resources, a nation cannot achieve rapid economic growth.

Accepted Answer

While natural resources can help boost economic growth, it is not a necessity for rapid economic growth. Many countries without abundant natural resources have achieved rapid economic growth through other means such as technology, innovation, and strong economic policies.

Question 18

Saving is a larger percentage of domestic output in DVCs than in IACs, but the saving is put to poor use.

Accepted Answer

In general, Domestic Savings as a percentage of GDP can vary widely among Developing and Industrialized countries, but it's not accurate to say that savings are always a larger percentage of domestic output in Developing Countries (DVCs) than in Industrialized Advanced Countries (IACs). Moreover, the effectiveness of how savings are utilized (investment efficiency) can also vary significantly within both groups and does not universally apply as stated.

Question 19

Capital flight from DVCs (developing countries) tends to offset much of the foreign loans and aid that they receive from IACs (industrially advanced countries).

Accepted Answer

Capital flight refers to the process of large amounts of money leaving a country due to economic or political instability, leading to a reduction in investment and growth in that country. This outflow of capital can offset the inflow of foreign loans and aid received by developing countries from industrially advanced countries. Hence, the statement is true.

Question 20

Japan is a nation that achieved a high standard of living despite having a very limited supply of natural resources.

Accepted Answer

Japan is known for importing most of its natural resources, such as oil, coal, and natural gas, as it has very limited domestic resources. However, despite this, Japan has managed to become one of the world's largest economies and achieve a high standard of living through its strong manufacturing and technology industries.

Quiz 42: The Economics of Developing Countries