Deck 15: Finance and Fiscal Policy for Development  

Question 1

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.

Answer 1

B

Question 2

Why do NGOs target women borrowers while making microloans?

Answer 2

Discussed in the chapter in the section on "Microfinance Institutions."

Question 3

The evidence regarding military spending is that it

A)reduces growth.
B)has no effect on growth.
C)increases growth.
D) presents no clear pattern.

Answer 3

A

Question 4

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

Question 5

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 6

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

Question 7

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

Question 8

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

Question 9

What is a development bank? What are some of the reasons they have not had greater success?

Question 10

Does it matter how much a developing country saves? Explain why or why not. Discuss theories and 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 increased or decreased taxation of one or more types, and increased or decreased government spending of one or more types.

Question 11

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

Question 12

Why are women considered to be more creditworthy for microloans?

Question 13

Among the rationales for state-owned enterprises is

A)the existence of a monopoly.
B)the need for capital formation.
C)the desirability of national control over strategic sectors of the economy.
D) all of the above.
E) none of the above.

Question 14

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

Question 15

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

Question 16

Compare and contrast the level of military spending in developing and developed economies. Compare and contrast the level of military and social spending in developing economies. What evidence is there regarding the link between economic development and military spending?

Question 17

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 18

Explain how group lending works.

Question 19

How can joint liability lower the interest rate for microborrowers?

Question 20

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 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

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

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

From 1995-1997, 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

The military expenditures of developing economies make up approximately

A)1% of GDP.
B)3% of GDP.
C)5% of GDP.
D) 10% of GDP.

Question 26

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 27

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 28

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.