Question 1

Economic growth in the DVCs might increase if IACs

Accepted Answer

If IACs reduce their tariffs and import quotas, it will create a more favorable environment for DVC businesses to export goods and services. This will increase their access to foreign markets and could stimulate economic growth.

Question 2

Most of the DVCs of the world are located in Western Europe.

Accepted Answer

Most of the Developed Countries (DVCs) are spread across different regions including North America, Western Europe, and parts of Asia and Oceania, not predominantly in Western Europe.

Question 3

If the real outputs per capita of a rich nation and a poor nation grow at the same percentage rate,
the absolute income gap between the two nations will shrink.

Accepted Answer

While the percentage rate of growth may be the same, the starting point of the rich nation is likely much higher than that of the poor nation. Therefore, the absolute income gap may still widen or remain the same despite both nations experiencing growth.

Question 4

Which of the following is not a DVC policy likely to increase DVC economic growth?

Accepted Answer

Encouraging emigration of highly skilled workers would not increase DVC economic growth as it would result in a brain drain and a lack of skilled labor for the country's economic development. The other policies listed, such as attracting foreign investment, opening to world trade, and establishing independent central banks, would all likely contribute to increased economic growth.

Question 5

In recent years, the governments of the IACs have

Accepted Answer

In recent years, many IACs have forgiven a portion of the debt owed by some low-income DVCs as a way to help relieve their financial burdens. This has been seen as a way to promote economic growth and stability in these countries.

Question 6

Large agricultural subsidies for food and ﬁber in IACs hurt the economies of the DVCs by

Accepted Answer

Large agricultural subsidies in IACs reduce world agricultural prices, leading to lower export income for DVCs. This can have a harmful impact on their economies.

Question 7

(Last Word) Loans offered through microcredit programs

Accepted Answer

Microcredit programs have very high repayment rates, as borrowers are typically highly motivated to repay the loan in order to maintain access to future loans. This has been a success story in poverty alleviation around the world.

Question 8

State industries are notoriously poor "incubators" for the development of proﬁt-focused, entrepreneurial persons who may leave the ﬁrm to set up their own businesses. This statement is an
Argument in favor of

Accepted Answer

The statement suggests that state industries do not encourage or foster entrepreneurship, and often do not produce successful individuals who can build profitable businesses. This can be seen as an argument in favor of privatizing state industries to create an environment that fosters innovation and entrepreneurship.

Question 9

Most nations of the world are now IACs, not middle- and low-income DVCs.

Accepted Answer

Most nations of the world are classified as middle- and low-income developing countries (DVCs), not high-income advanced countries (IACs).

Question 10

The most important growth obstacle common to all DVCs is the lack of desire to increase their
standards of living.

Accepted Answer

Lack of desire to increase living standards is a common growth obstacle for DVCs, but there are several other significant obstacles such as limited access to capital, inadequate infrastructure, and low productivity.

Question 11

(Last Word) Providing poor families with grants if they send their children to school and get proper medical care is known as

Accepted Answer

The policy described is conditional cash transfers, where families receive grants conditional on certain requirements such as sending children to school and receiving medical care.

Question 12

DVCs tend to have permanent shortages of farm labor.

Accepted Answer

The answer of DVCs tend to have permanent shortages of...

Question 13

Which of the following DVC policies is not likely to increase DVC economic growth?

Accepted Answer

Restricting direct foreign investment from abroad is likely to limit the amount of capital coming into the country, which can hinder economic growth. Privatizing state industries can encourage competition and efficiency, building human capital can improve the skills and productivity of the workforce, and controlling population growth can help ensure resources are not spread too thin.

Question 14

Saving is low in many DVCs primarily because income is very equally distributed.

Accepted Answer

Low savings in many DVCs are due to various socio-economic factors such as low income levels, lack of financial literacy, insufficient access to financial services, high levels of debt, and limited employment opportunities in formal sectors. The unequal distribution of income can also play a role, but it is not the primary reason for low savings rates.

Question 15

The differences in the per capita incomes of the IACs and the DVCs have diminished sharply since
the Second World War because of U.S. aid programs.

Accepted Answer

The statement is false. The differences in per capita incomes between the IACs (industrially advanced countries) and the DVCs (developing countries) have actually widened since the Second World War, despite U.S. aid programs.

Question 16

(Last Word) Early experience with conditional cash transfers has revealed that

Accepted Answer

Early experience with conditional cash transfers has shown that they do encourage school enrollment, but poor-quality schools limit the ability to lift people out of poverty. While there is some evidence of improvement in nutrition and health, it is not necessarily significant. There has also been no evidence of a significant earnings advantage for recipients over non-recipients.

Question 17

Capital ﬂight refers to the fact that many DVCs must use their export earnings to pay interest on
their outstanding external debts.

Accepted Answer

Capital flight refers to the rapid outflow of capital from a country due to economic or political instability, not the use of export earnings to pay interest on external debts.

Question 18

The vast majority of the labor forces of the low-income DVCs are engaged in agriculture.

Accepted Answer

The statement correctly states that the majority of the labor forces in low-income Developing Countries (DVCs) are engaged in agriculture.

Question 19

(Last Word) Early experiments with unconditional cash transfers have revealed that

Accepted Answer

Early experiments with unconditional cash transfers have shown that a majority of recipients use the money for training and equipment that results in a higher long-term income. This has been observed in various studies conducted in different countries, such as Mexico, Uganda, and India. While there may be some recipients who use the money for current consumption, the overall trend has been towards investments in education, health, and productive assets, leading to improved earning power in the long-term.

Question 20

Which of the following is a true statement?

Accepted Answer

The answer of Which of the following is a true...

Quiz 22: The Economics of Developing Countries