Deck 11: Economic Development

Question 1

Technological improvement is the production of a wider array of goods and services that more fully provide consumer satisfaction.

Answer 1

False

Question 2

According to the rule of 72, when a nation-s average annual rate of economic growth is 3 percent, it will take about _____ years for that nation-s ___________ to double in magnitude.

A) 24; per capita real income
B) 216; per capita real income
C) 24; population
D) 216; population

Answer 2

A

Question 3

The World Bank classifies low-income countries as those with per capita incomes less than a maximum threshold of about:

A) 18000
B) 12000
C) 4000
D) 1000

Answer 3

D

Question 4

If a nation-s rate of growth of economic growth is 3 percent and its rate of population growth is 2 percent, then its rate of growth in aggregate real income is:

A) 1 percent.
B) 1.5 percent.
C) 5 percent.
D) 6 percent.

Question 5

A key implication of the growth equation is that when the contribution of the growth of labor resources to economic growth is taken into account, a higher population growth rate ultimately:

A) must reduce economic growth.
B) must increase economic growth.
C) never has any effect on economic growth.
D) has an ambiguous effect on economic growth.

Question 6

Which of the following is not a potential problem faced by developing nations that borrow from abroad?

A) Interest payments on the debt obligations are transfers from domestic residents to foreign residents.
B) Funds obtained from foreign borrowing are often used to finance acquisitions of capital resources.
C) Foreign borrowers may place conditions on loans that effectively transfer some control over resource-allocation decisions away from domestic residents.
D) Foreign shorter-term investment and loans can be highly volatile.

Question 7

Based on World Bank estimates, about ___ billion people live on less than $____ per day.

A) 1; 5
B) 2; 3
C) 3; 2
D) 4; 1

Question 8

Which of the following is not a constituent institution of the World Bank?

A) World Trade Organization
B) International FINANCE CORPORTATION
C) International Bank for Reconstruction and Development
D) International Center for Settlement of Investment Disputes

Question 9

Of the following regions, which currently receives the largest share of World Bank assistance?

A) Africa
B) South Asia
C) Europe and Central Asia
D) the Middle East and North Africa

Question 10

Which of the following is a private organization that periodically seeks to address financial problems of less developed nations?

A) World Bank
B) London Club
C) Paris Club
D) International Bank for Reconstruction and Development

Question 11

About __________ borrowers in developing nations receive a total volume of microlending estimated at about _________.

A) 200 million; $3 billion
B) 1.2 billion; $5 billion
C) 2 billion; $300 billion
D) 3 billion; $20 billion

Question 12

A bilateral investment treaty between two nations ensures that no flows of investment will take place across their nations and thereby insulates them from destabilizing volatility of flows of foreign direct investment and portfolio investment.

Question 13

The Paris Club is an informal international organization of private creditors first established in 1976 to address repayment problems experienced by Zaire.

Question 14

Product innovations broaden the range of markets for goods and services within a nation.

Question 15

Economists measure economic growth as the percentage change in a nation-s per capita real income.

Question 16

A country-s per capita real income is equal to the product of a nation-s population multiplied by the country-s aggregate, inflation-adjusted income.

Question 17

According to the rule of 72, the number of years required for a country's per capita real income to double is approximately equal to 72 divided by the average annual rate of economic growth.

Question 18

By definition, the rate of growth of per capita real income equals the sum of the rate of growth of aggregate real income and the rate of population growth.

Question 19

The growth equation is a relationship indicating that the rate of growth in a country's aggregate real income is equal to the sum of three components: (1) the rate of growth of productivity of labor and capital; (2) the contribution to aggregate real income of labor resources multiplied by the rate of growth of labor resources; and (3) the contribution to aggregate real income of capital resources multiplied by the rate of growth of capital resources.

Question 20

Dead capital resources are those that are untaxed by national governments.

Question 21

Entrepreneurs are individuals who seek to earn profits from organizing the production and distribution of goods and services.

Question 22

The bulk of international trade is carried out by the minority of the world-s population residing in developed nations.

Question 23

The World Bank was established in 1971, following the collapse of the Bretton Woods system of fixed exchange rates.

Question 24

A double taxation treaty:

A) imposes both a standard domestic tax rate on a foreign investor-s return and a special tax rate to ensure investors pay taxes in their home nation.
B) imposes a tax rate on the returns earned by foreign investors that is twice as high as the tax rate on domestic investors- returns.
C) exempts from taxation a specified portion of the return on an investment, or offers tax credits to foreign investors.
D) exempts from taxation all returns of investors whose earnings also are not taxed in their home nation.