Question 1

What are some of the benefits of allowing and encouraging foreign investment in a country?

Accepted Answer

The answer of What are some of the benefits of...

Question 2

Portfolio investment is the purchase of capital by a foreign firm in more than a 10 percent ownership share in a domestic firm.

Accepted Answer

Portfolio investment is the purchase of the securities (stocks, bonds, etc.) of a domestic firm by a foreign firm or individual, but the ownership share does not have to be more than 10 percent. Foreign direct investment is the purchase of a controlling interest (more than 10 percent ownership share) in a domestic firm.

Question 3

Exhibit 28-1 $$\begin{array} { | c | c | c | } 
\hline \text { Country } & \begin{array} { c } 
\text { Per Capita real } \
\text { GDP in } 1965
\end{array} & \begin{array} { c } 
\text { Average arumal rate of } \
\text { growth from } \mathbf { 1 9 6 5 } \text { to } \
\mathbf { 1 9 8 9 } ( \mathbf { 0 } )
\end{array} \
\hline \text { Algeria } & 3,129 & 2.28 \
\hline \text { Benin } & 2,248 & - 0.96 \
\hline \text { Botswana } & 1,210 & 5.71 \
\hline \text { Burkina Faso } & 681 & 1.26 \
\hline \text { Burundi } & 751 & 1.39 \
\hline \text { Cameroon } & 1,215 & 2.40 \
\hline
\end{array}$$
-Plot on a scatter diagram the data from the African countries listed in Exhibit 28-1. Does there appear to be a catch-up line in the scatter diagram?

Accepted Answer

The answer of Exhibit 28-1 \[\begin{array} { | c |...

Question 4

The IMF is a financial intermediary.

Accepted Answer

The IMF (International Monetary Fund) is an international organization that acts as a financial intermediary between countries, providing loans and financial assistance to member countries experiencing economic difficulties. Therefore, the statement is true.

Question 5

A country with a population growth of 5 percent and capital growth of 10 percent is better off than a country with population growth of 2 percent and capital growth of 2 percent. Please answer true or false and explain.

Accepted Answer

The country with the higher rate of population growth has a capital labor ratio that is growing more quickly because the rate of capital growth is so much higher than the other country. The other country has a constant capital labor ratio.

Question 6

Poor countries are in principle aided by larger current account surpluses in the developed countries.

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Question 7

Which of the following increases the likelihood of poor countries catching up to rich countries, and which decreases the likelihood? Explain.
 (A) Developing caustries heve better access to the technolog of tevelaped cauntres.
(B) Inchustrialized countries run larger goverment budget supluses.
(C) The level of corruption in developing cauntries increases.
(D) Develaping cauntries became mare reluctant to provide schoaling far all their citizens
(E) Developing cauntries bepin to emphasize exgart-led stratepies.

Accepted Answer

The answer of Which of the following increases the likelihood...

Question 8

The World Bank and the International Monetary Fund were established after World War II as part of a major reform of the international monetary system.

Accepted Answer

The World Bank and the International Monetary Fund were established in 1944 as part of the Bretton Woods Agreement, which aimed to establish a stable international monetary system after World War II.

Question 9

Why has there been a convergence in real income per capita for Western European countries, but not for African countries?

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Question 10

Conditionality refers to

Accepted Answer

Conditionality refers to the concept that the IMF will lend money to a country on the condition that the country undertakes economic reform. This means that the country must implement specific economic policies and make changes to its economic structure in order to receive the loan. The IMF may require the country to reduce government spending, privatize certain industries, or adjust its exchange rate, among other measures. The purpose of conditionality is to ensure that the country can pay back the loan and improve its economic situation in the long-term.

Question 11

Suppose that per capita income in country A, a developed country, is $30,000 per year, and per capita income in country B, a developing country, is $5,000 per year.
 (A) Why does econamic theary predict that caunty $B$ will eventunally catch up with caunty A?
(B) Suppose cauntry B's incame per capita grows at 5 percent and caunty A's incame per capite growr at l percent. Using the rule of 72 , plot the growth path of income per capita relative ta tine far each cauntry. Based an this Paph da you think caunty $B$ wrill catch up with caunty A?
(C) Da you think cantry $B$ wril cantinue to frow at 5 percent?

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Question 12

Does the saving rate in developed countries have any effect on the time it takes for developing countries to catch up with the developed part of the world? Explain.

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Question 13

The World Bank makes loans to governments and for general purposes, never for specific projects.

Accepted Answer

The World Bank does make loans for specific projects, known as project loans, in addition to general purpose loans.

Question 14

Why is it not a good idea for a developing country to avoid having a trade deficit?

Accepted Answer

The answer of Why is it not a good idea...

Question 15

Answer the questions below:
 (A) Eiglan the relationship between 5 aving investinent and net exgarts far the warld an a whole.
(B) Suppase the Aevelaped cauntries decide to lend mare to less develaped cauntries. Haw wauld this affect the developing cauntries?

Accepted Answer

The answer of Answer the questions below:
 (A) Eiglan the...

Question 16

How would each of the following affect the world interest rate and growth prospects in developing countries, all else the same?
 (A) An increase in the marginal propensity to consune in eeveloped countries
(B) A decrease in government spending in developed countries

Accepted Answer

The answer of How would each of the following affect...

Question 17

Other things being equal, a country with population growth of 5 percent will grow more slowly than a country with population growth of 2 percent. Please answer true or false and explain.

Accepted Answer

The country with higher population growth will have a capital labor ratio that is growing more slowly.

Quiz 17: Economic Growth Around the World