Question 1

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 indeed based on the connections between low income, low saving, low investment, and low productivity. These factors reinforce each other and make it difficult for individuals or countries to escape poverty.

Question 2

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 gap between IACs and DVCs has actually been widening over the past few decades, with IACs experiencing higher levels of economic growth and development than DVCs.

Question 3

What is the immigration problem for DVCs?

Accepted Answer

The immigration problem for DVCs is that too few people are allowed to move from DVCs to IACs, and IAC policies tend to favor the movement of the most productive DVC workers. This leads to a brain drain from DVCs, where the most talented and skilled workers migrate to the IACs, leaving the DVCs with a shortage of skilled workers. Additionally, IACs may prioritize admitting those who will be most productive in their economy, which often means admitting people with more education and skill sets.

Question 4

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

Accepted Answer

While natural resources can certainly play a role in economic growth, they are not the sole determining factor. Other factors such as human capital, technology, infrastructure, and institutional frameworks also play important roles in driving economic growth. Additionally, countries with abundant natural resources often fall victim to the "resource curse," where the overreliance on a particular resource leads to economic instability and underinvestment in other sectors.

Question 5

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 movement of capital (money or assets) out of a country. This can happen when investors lose confidence in a country's economic or political situation, and they withdraw their investments. In DVCs, capital flight can offset much of the foreign loans and aid they receive from IACs, making it more difficult for them to advance economically. Therefore, the statement is true.

Question 6

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

Accepted Answer

The public sector, which includes government agencies and entities, is typically responsible for building and maintaining infrastructure such as roads, bridges, water and sewage systems, and public transportation. While private companies may also invest in infrastructure, the primary responsibility falls on the public sector to ensure that the necessary infrastructure is in place to support economic growth and meet the needs of the population.

Question 7

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 8

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 9

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 10

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

The statement is true.

Question 11

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

Accepted Answer

Large and fast-growing populations in developing countries put pressure on resources and infrastructure, making it more difficult for individuals to achieve high levels of productivity and income. Additionally, the surplus supply of labor can drive down wages, further contributing to lower per capita incomes.

Question 12

In contrast to international development efforts in most of the 20th century, more recent projects like microfinance, microcredit, and cash transfers in the last few decades represent a major shift. That is because these recent projects are

Accepted Answer

The recent projects like microfinance, microcredit, and cash transfers are focused on giving direct aid to poor individuals, which is a major shift from the previous international development efforts that focused on large-scale infrastructure projects done through governments or multilateral organizations.

Question 13

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. The majority of the recipients spent the money as intended. Studies have also shown that the unconditional cash transfers have worked better in most cases. However, it is important to note that follow-up and support for recipients can improve the long-term impact of such interventions.

Question 14

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 a large portion of its natural resources, such as oil and natural gas, due to its limited domestic supply. However, through efficient use of resources and advanced technologies, Japan has managed to achieve a high standard of living and become one of the world's leading industrial and technological nations.

Question 15

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 crucial institutional obstacle to economic growth in many developing countries. Unequal land distribution and inadequate property rights can lead to inefficient land use, low productivity, and social conflict, hindering economic development. Implementing effective land reforms can help unlock the potential for agricultural growth, poverty reduction, and inclusive development.

Question 16

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 statement is true according to various studies and reports from organizations such as the World Bank and the United Nations. The income inequality gap between the rich and poor continues to widen, with the richest individuals and families accumulating more wealth while the poorest struggle to make ends meet.

Question 17

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 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 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 with the help of external assistance, investments, education, and other measures that help to stimulate economic growth and development.

Question 20

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...

Quiz 28: The Economics of Developing Countries