Question 1

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

Accepted Answer

With large and fast-growing populations, there is a larger labor force and more competition for jobs, which can lead to lower wages and incomes. Additionally, providing basic services and infrastructure for a growing population can strain government resources and divert funds away from investments in economic development.

Question 2

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 3

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

Accepted Answer

Japan has limited natural resources such as minerals, oil, and agricultural land, but it has still managed to achieve a high standard of living through its technological advancements, efficient use of resources, and strong economy based on trade and services.

Question 4

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

Accepted Answer

The public sector, including the government, is primarily responsible for providing and maintaining infrastructure such as roads, bridges, airports, water supply systems, and electricity grids for the general public. Private sector involvement may be present, but it is often in partnership with the public sector or for commercial gain rather than meeting public needs.

Question 5

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 6

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 or assets in a foreign country. Honda Motors building a motorcycle factory in China is an example of direct foreign investment.

Question 7

The industrially advanced nations can assist developing nations by reducing trade barriers and by
providing both private and public capital.

Accepted Answer

By reducing trade barriers and providing private and public capital, developed nations can help developing nations grow their economies and become more successful.

Question 8

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 9

In recent years, a greater proportion of private capital ﬂows to DVCs has been direct foreign
investment rather than loans to DVC governments.

Accepted Answer

The statement is true according to the information given.

Question 10

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 outflow of financial assets from a country, which can happen due to various reasons such as political instability, economic uncertainty, or low returns on investment opportunities. When developing countries receive foreign loans and aid from industrially advanced countries (IACs), some portion of this money may be lost due to capital flight, as investors in the developing country may choose to send their money abroad instead of investing it locally. Therefore, the statement is true.

Question 11

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 12

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 actually been widening over the years.

Question 13

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 often seen as a major obstacle to economic growth in many developing countries, as unequal land distribution and insecure land tenure can lead to social and political instability, as well as hinder investment and productivity. By implementing measures such as redistributing land, improving land registration and titling, and strengthening land rights for marginalized groups, countries can promote a more equitable and sustainable development path.

Question 14

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 the public sectors of many developing countries.

Question 15

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 16

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

Accepted Answer

The vicious circle of poverty can be broken through various means such as economic development, investment in education and healthcare, and government policies that promote growth and redistribution. While it may be difficult and may take time, it is not impossible for poor nations to break out of this cycle.

Question 17

In 2017, the IACs (industrially advanced countries) had an average per capita income that was about
50 times as high as that of the low-income nations.

Accepted Answer

This statement is true. According to World Bank data from 2017, the average per capita income in industrially advanced countries was $44,770, while in low-income nations it was $890, making the income in IACs approximately 50 times higher.

Question 18

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 19

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 concept that describes how poverty is self-perpetuating and difficult to break out of due to the interconnectedness of low income, low saving, low investment, and low productivity.

Question 20

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

Accepted Answer

While natural resources can certainly contribute to economic growth, they are not the only factor. Other important factors include human capital, technology, infrastructure, and political stability. Many countries with limited natural resources have still managed to achieve significant economic growth by investing in these other areas.

Quiz 22: The Economics of Developing Countries

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

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

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

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

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

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

The industrially advanced nations can assist developing nations by reducing trade barriers and by providing both private and public capital.

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

In recent years, a greater proportion of private capital ﬂows to DVCs has been direct foreign investment rather than loans to DVC governments.

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

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.

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.

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

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.

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

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

In 2017, the IACs (industrially advanced countries) had an average per capita income that was about 50 times as high as that of the low-income nations.

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

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

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