Question 1

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

Accepted Answer

Technological improvement refers to advancements or innovations that increase the efficiency or effectiveness of production processes, not necessarily the production of a wider array of goods and services.

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

Accepted Answer

According to the rule of 72, to find out how long it takes for something to double in size at a given annual growth rate, you can divide 72 by that growth rate. So, 72 divided by 3 equals 24, meaning it would take about 24 years for the nation's per capita real income to double in magnitude. Population is not mentioned in the rule of 72 for economic growth.

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

Accepted Answer

The World Bank classifies low-income countries based on their Gross National Income (GNI) per capita. The threshold for low-income countries is typically around or below $1,000, though this figure can be adjusted annually based on various economic factors.

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.

Accepted Answer

The rate of growth in aggregate real income is the sum of the rate of economic growth and the rate of population growth, which is 3 percent + 2 percent = 5 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.

Accepted Answer

The growth equation suggests that the effect of population growth on economic growth is ambiguous. While a larger population could increase the number of workers and consumers, it could also lead to diminishing returns and strain on resources. Therefore, it is not possible to predict with certainty whether a higher population growth rate will ultimately increase or reduce 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.

Accepted Answer

This statement is not a potential problem faced by developing nations that borrow from abroad. In fact, obtaining funds from foreign borrowing to finance acquisitions of capital resources can be a positive factor for economic growth and development. The other options (A, C, and D) are all potential problems that can arise from foreign borrowing.

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

Accepted Answer

The answer of Based on World Bank estimates, about ___...

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

Accepted Answer

The World Trade Organization (WTO) is a separate international organization that deals with the rules of trade between nations. The World Bank is composed of a group of five institutions, including the International Finance Corporation (IFC), the International Bank for Reconstruction and Development (IBRD), and the International Center for Settlement of Investment Disputes (ICSID).

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

Accepted Answer

The World Bank Group's largest single source of funding for Africa comes from the International Development Association, which provides interest-free loans and grants to the poorest countries in the world. Therefore, currently, Africa receives the largest share of World Bank assistance.

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

Accepted Answer

The London Club is a private group of commercial banks that addresses financial problems of less developed nations by restructuring their debt.

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

Accepted Answer

The answer of About __________ borrowers in developing nations receive...

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.

Accepted Answer

This statement is incorrect. A bilateral investment treaty (BIT) between two nations actually encourages and protects flows of foreign direct investment (FDI) and portfolio investment between them, by providing legal protection to investors from one country in the other country. A BIT usually includes provisions for protection of intellectual property, non-discriminatory treatment, and dispute resolution mechanisms, among other things, to create a more conducive environment for 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.

Accepted Answer

The Paris Club is an informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries. It was established in 1956, not 1976, and it deals with public debt, not private creditors.

Question 14

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

Accepted Answer

Product innovations can increase the potential customer base by creating new needs or fulfilling unmet needs. This can lead to increased sales and market growth for businesses within a nation.

Question 15

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

Accepted Answer

Economic growth is commonly measured as the percentage change in a nation's real GDP (gross domestic product) or GNP (gross national product) per capita over time. Real income per capita is a common indicator of a nation's standard of living and economic well-being, making it a useful measure of economic growth.

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.

Accepted Answer

Per capita real income is calculated by dividing the country's aggregate, inflation-adjusted income by its population.

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.

Accepted Answer

This is the statement of the rule of 72, which is a mathematical approximation that can be used to estimate the time it takes for an investment or economy to double in size based on a fixed rate of 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.

Accepted Answer

The rate of growth of per capita real income equals the rate of growth of aggregate real income minus 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.

Accepted Answer

The statement accurately describes the growth equation.

Question 20

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

Accepted Answer

Dead capital resources are those that are not legally recognized by the government, usually because they are informal, unregistered or do not have clear ownership titles. This can include assets such as informal housing, small businesses, and untitled land. They are not necessarily untaxed by national governments.

Quiz 11: Economic Development

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

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.

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

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 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:

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

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

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

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

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

About __ borrowers in developing nations receive a total volume of microlending estimated at about _.