Question 1

The vicious circle of poverty in the poorest DVCs can also be expressed as,

Accepted Answer

This choice accurately describes the cycle of poverty in which the low-income status of a country inhibits its ability to improve its economic condition. The lack of resources and opportunities leads to continued poverty, making it difficult for individuals and the country as a whole to escape this cycle. A and D may also contribute to the issue but do not fully capture the cyclical nature of poverty in the poorest DVCs. B suggests external factors beyond the control of the countries, which is not always the case.

Question 2

If it is cheaper in the long run to use a new metal plow that lasts a long time than an inferior wooden plow that needs to be replaced often, then this is an example of

Accepted Answer

The use of a new metal plow that lasts a long time is a capital-saving technology, as it ultimately reduces the need for frequent replacement and therefore saves on capital costs in the long run.

Question 3

Many economists believe that the key to breaking the vicious circle of poverty is to

Accepted Answer

Increasing the rate of capital accumulation in poor nations is considered crucial by many economists as it can help in increasing investment, creating jobs, and stimulating economic growth which can ultimately help in breaking the vicious circle of poverty. This can be achieved through various strategies such as encouraging foreign investment, improving access to credit, and supporting small and medium-sized enterprises. While reducing mortality rates and birth rates and increasing mobility of labor can also help in reducing poverty, they may not necessarily address the root cause of the problem.

Question 4

Infrastructure is best illustrated by

Accepted Answer

Infrastructure refers to the basic physical and organizational structures and facilities needed for the operation of society. Roads and bridges are examples of physical infrastructure that are essential for transportation and commerce.

Question 5

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

Accepted Answer

The issue with saving in Developing and Vulnerable Countries (DVCs) is that even if the saving rate as a percentage of domestic output matches that of industrially advanced countries, the absolute volume of savings remains small due to the lower level of domestic output in DVCs. This makes it challenging to accumulate significant capital for investment.

Question 6

Which of the following would most help a developing country (DVC) break out of the vicious circle of poverty?

Accepted Answer

Increasing labor productivity means that workers are able to produce more goods and services in the same amount of time, which can lead to a growth in the economy. This can help break out of the vicious circle of poverty as more production can increase income, which can then be used for investment in infrastructure and education, leading to further economic growth. The other options do not necessarily address the root causes of poverty and may even exacerbate the problem in the long run.

Question 7

Which of the following is a factor limiting saving in DVCs?

Accepted Answer

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

Question 8

What is needed to aid capital formation in developing countries?

Accepted Answer

Developing countries need more entrepreneurship to aid capital formation. Entrepreneurship helps to stimulate innovation and creates new businesses, which in turn creates employment and boosts economic growth. It also encourages investment in new ideas and technology, leading to increased production and efficiency. More capital flight, more oil resources, and higher price supports for products are not necessarily good solutions for aiding capital formation in developing countries as they do not address the underlying issues that prevent capital formation.

Question 9

Most economists agree that government efforts in economic development must be

Accepted Answer

Most economists believe that government efforts should be designed to support private efforts in economic development. This means that the government should create a regulatory and policy environment that encourages private investment and entrepreneurship, rather than replacing private efforts altogether. However, there may be cases where the government needs to intervene more directly, such as by providing funding for basic research or infrastructure development, in order to spur economic growth.

Question 10

A new fertilizer that is better suited to a nation's topography and climate is an example of a technological advance that is

Accepted Answer

The new fertilizer would be considered capital saving because it improves the efficiency of existing capital (land, labor, and other inputs) by being better suited to the topography and climate. It does not necessarily require additional capital investment.

Question 11

Capital ﬂight is a problem facing DVCs that involves the

Accepted Answer

Capital flight refers to the transfer of private savings from a developing country to an industrialized country. This is a significant problem for DVCs because it deprives them of much-needed capital for development and can exacerbate poverty and inequality. Options A, C, and D are not related to the issue of capital flight.

Question 12

If a local leader in a developing nation claims that there is little or no correlation between a person's efforts and the economic rewards that are given to that person, this leader is most likely expressing
A

Accepted Answer

The answer of If a local leader in a developing...

Question 13

Which of the following seems to be the most acute institutional problem that needs to be resolved by many DVCs?

Accepted Answer

Political corruption can hinder economic growth and development, discourage foreign investment and aid, and create a negative image of the country. Therefore, it is crucial for DVCs to address this issue in order to attract investors and improve their overall economic condition. The use of capital-saving technology and development of natural resources are also important, but they may not have as immediate an impact as reducing political corruption. Foreign aid can be helpful, but it may not be a sustainable solution for long-term economic progress.

Question 14

Which of the following is most characteristic of most developing nations?

Accepted Answer

Developing nations typically have low levels of saving and investment due to factors such as political instability, inadequate infrastructure, and limited access to financial resources. This hinders economic growth and development in these countries. While some developing nations may have a relatively equal distribution of income or high labor productivity in agriculture, these factors are not as consistently characteristic across developing nations as low levels of saving and investment.

Question 15

Which of the following statements is correct?

Accepted Answer

The statement "Investment is low in developing nations, making it difficult to increase productivity and incomes" is correct. Saving rates may be high in less-developed nations, but that does not necessarily lead to higher investment or productivity. The annual rate of population increase in developing nations is generally lower than 5 percent, and the labor force in developing nations is engaged in a variety of industries, not just light industrial production.

Question 16

The diversion of surplus labor in agriculture to the production of schools or roads in developing countries is described as

Accepted Answer

The diversion of surplus labor in agriculture to the production of schools or roads in developing countries is often referred to as in-kind investment, where the surplus labor is redirected towards infrastructure and social development projects rather than being solely focused on agricultural production. This investment can help to promote overall economic growth and development in the country.

Question 17

Which of the following is not an example of a sociocultural impediment to economic growth?

Accepted Answer

Migration of labor resources from agricultural to urban areas is not an example of a sociocultural impediment to economic growth. It is rather a natural phenomenon that occurs as countries develop, and is more related to demographic and economic factors. The other choices, tribal allegiances, religious beliefs, and caste-based job allocation, all reflect cultural or social factors that can hinder or limit economic progress in certain contexts.

Question 18

A factor that limits the amount of saving in developing countries is the fact that

Accepted Answer

The level of aggregate domestic output being low means that people in developing countries have lower incomes and are likely living close to or below the poverty line. This makes it difficult for them to save as they may need to use most or all of their income for basic necessities. Additionally, without access to financial resources, such as banks, it can be difficult to save money. However, A and D may also be contributing factors in some cases.

Question 19

The "vicious circle of poverty" for developing nations can best be described by

Accepted Answer

The "vicious circle of poverty" refers to the fact that low incomes inhibit saving and the accumulation of real and human capital, making it difficult to increase productivity and income. This, in turn, perpetuates low levels of economic development and poverty. The cycle must be broken through interventions that increase investment, productivity, and incomes. The other options are not directly related to the vicious cycle of poverty.

Question 20

An institutional change that is needed in most developing nations is

Accepted Answer

Land reform is an institutional change that is needed in most developing nations to address the issue of land inequality. In many developing countries, a small group of people (often elites or foreigners) own a significant portion of the land, while the majority of the population owns very little or no land at all. Land reform can help redistribute land to the poor and landless, stimulate agricultural production, and promote economic growth and social stability. The other options, while important, do not address the underlying issue of unequal land distribution.

Quiz 22: The Economics of Developing Countries