Question 1

Which one of the following statements is true?

Accepted Answer

Dead capital refers to assets that are not being used to their full potential due to legal, social or economic barriers. These assets are often difficult to trade or insure because they lack clear ownership titles or legal recognition. Therefore, it is difficult to allocate them to their best possible use. Dead capital is often found in countries with weak property rights, informal economies, and underdeveloped financial markets. It is not necessarily correlated with prosperity.

Question 2

Which of the following is NOT true about dead capital?

Accepted Answer

Dead capital can lead to inefficient utilization of resources, inhibit economic growth, and make companies less likely to invest. It does not, however, lead to higher investment returns.

Question 3

When government inefficiencies exist,

Accepted Answer

Government inefficiencies can lead to slower economic growth as resources are not being allocated efficiently and potential productivity gains are not being realized. This can result in wasted resources and less output. Additionally, it can lead to decreased investor and consumer confidence, which can further harm economic growth. Dead capital may also be a problem as inefficient bureaucracy and corruption can make it difficult for businesses and individuals to access the resources they need to invest and grow.

Question 4

The role that dead capital plays in a country's economic growth is that

Accepted Answer

Dead capital refers to assets, such as property or land, that are not formalized or recognized by the government or legal system. Therefore, property rights cannot be established, and individuals cannot use the assets as collateral to obtain credit or invest in more productive assets. This leads to underinvestment and prevents the capital from being allocated to its most efficient use, ultimately impeding economic growth.

Question 5

Countries with the highest degrees of governmental bureaucratic inefficiency index

Accepted Answer

Countries with the highest degrees of governmental bureaucratic inefficiency index typically have the lowest real GDP per capita. This is because bureaucratic inefficiency leads to slower economic growth and development.

Question 6

Dead capital is

Accepted Answer

Dead capital is capital that is not being used to its full potential because it lacks a clear title of ownership. This often occurs in developing countries where there may be informal or traditional systems of property ownership that are not recognized by the government, making it difficult to buy or sell property or use it as collateral for loans.

Question 7

Dead capital is

Accepted Answer

Dead capital refers to assets that cannot be fully utilized due to legal or economic constraints, such as insecure property rights or lack of access to finance. Therefore, dead capital is unlikely to be applied to its most efficient use, which would generate economic growth and development.

Question 8

Countries with a high level of bureaucratic inefficiency tend to have low rates of real GDP growth because

Accepted Answer

Bureaucratic inefficiency creates complications and obstacles for businesses trying to invest and grow, leading to capital goods being used in less efficient ways or not at all. This ultimately hinders economic growth and reduces real GDP. Poor accounting practices and management skill development may contribute to this problem, but they are not the primary cause. Facilitating capital goods development would actually increase economic growth, so option D is not correct.

Question 9

When a country has a large amount of dead capital,

Accepted Answer

When a country has a large amount of dead capital, it means that a significant amount of resources, such as land, property, and assets, are not being used efficiently or not being used at all. This leads to inefficient capital allocation and the underutilization of available resources, which can hamper economic growth. Therefore, large amounts of capital will be inefficiently employed in such a scenario.

Question 10

The relationship of dead capital to inefficient production is

Accepted Answer

Dead capital refers to assets, such as land or property, that are not being used effectively due to unclear or insecure property rights. Without clear ownership, it is difficult to sell or transfer such resources, thus hindering their productive use. This results in inefficient production, as these assets remain unused or underutilized.

Question 11

The following are impediments to economic growth EXCEPT

Accepted Answer

Increased education is not an impediment to economic growth. The other options listed are all potential obstacles to economic growth. Dead capital ties up resources that could otherwise be used for investment; lack of economic freedom can stifle entrepreneurship and innovation; and bureaucratic inefficiency can slow down the implementation of policies and hinder the development of businesses.

Question 12

Economic growth is enhanced when

Accepted Answer

Economic growth is enhanced when capital resources are devoted to their most efficient use. This allows for the production of more goods and services and thus increases economic output. Restricting competition, barriers to legal ownership, and providing scarce resources for free do not promote efficient use of resources and may even reduce economic growth.

Question 13

Extensive government restrictions on the use of capital are likely to

Accepted Answer

Extensive government restrictions on the use of capital, such as heavy regulations and taxes, can create dead capital. Dead capital refers to assets that are legally owned but cannot be used as collateral or traded, which imposes a significant cost on the economy. This can negatively impact economic growth and hinder the efficient allocation of resources. Therefore, option A is the best answer. Option B is incorrect because restrictions on capital use can actually hinder economic growth. Option C is also incorrect because excessive government restrictions on capital can limit economic freedom. Option D could be a possible outcome of efficient government restrictions, but it is not guaranteed.

Question 14

One of the most significant barriers to economic growth in the world's poorest nations is

Accepted Answer

Dead capital, also known as trapped capital, refers to assets that cannot be used as collateral to secure loans or investments because they are not legally recognized or registered. This lack of formal property rights prevents individuals and businesses from accessing credit, which hinders economic growth in the long term. Environmental issues, political freedom, and U.S. government interference may also contribute to economic challenges in some countries, but dead capital is a significant, overarching obstacle.

Question 15

All of the following are major factors limiting economic growth in developing countries EXCEPT

Accepted Answer

Deregulation is not a major factor limiting economic growth in developing countries. Deregulation can actually promote economic growth by removing barriers to entry and reducing red tape. The other three factors - dead capital, inefficient government regulation, and corruption - are major obstacles to economic growth in developing countries. Dead capital refers to assets that are not documented or registered, which makes it difficult to use them as collateral for loans or sell them in markets. Inefficient government regulation can stifle entrepreneurship and innovation, while corruption can lead to a lack of trust in institutions and a distorted allocation of resources.

Question 16

When government inefficiencies exist and government officials can be bribed, then

Accepted Answer

When government inefficiencies exist and officials can be bribed, it increases the cost of investing in capital because businesses will have to bribe officials to get necessary permits or licenses, which in turn increases their overall costs. This can also discourage foreign investment as they may not want to engage in corrupt practices. Therefore, a bribe will increase the cost of investing in capital.

Question 17

When there is a building that is used for production, but no one has clear property rights to it,

Accepted Answer

When there is no clear property rights to a building used for production, it is known as "dead capital." This creates uncertainty and makes it difficult for anyone to invest in or improve the building. Therefore, it causes inefficiencies in production.

Question 18

The problem of dead capital can be eliminated by

Accepted Answer

Dead capital refers to assets that cannot be used as collateral for credit or investment because they lack legal recognition of ownership. Making it easier for people to establish legal ownership of productive capital can help eliminate the problem of dead capital by allowing these assets to be used as collateral, unlocking their potential for investment and growth. Changing the structure of import tariffs, increasing the labor force participation rate, and restricting population growth may have other economic benefits, but they are not directly related to resolving the problem of dead capital.

Question 19

Dead capital is most likely to exist when

Accepted Answer

Dead capital refers to assets that cannot be used productively due to a lack of legal recognition of ownership. This often occurs when residents face barriers to establishing legal ownership of resources, such as land and property, which can lead to a lack of investment and economic development. Restrictions on imports or exports, while potentially detrimental to economic growth, do not necessarily lead to dead capital. Well-defined property rights can actually help prevent dead capital by creating a clear framework for ownership and investment.

Question 20

The inefficiencies associated with dead capital can

Accepted Answer

Dead capital refers to assets that are not being used to their full potential or are not being used at all. These assets may include land that is owned but not developed or machinery that is not being utilized. Dead capital can lead to reduced productivity and lower rates of return on investment, as resources that could be put to more productive use are being wasted. Therefore, the inefficiencies associated with dead capital can reduce the rate of return on investment.

Quiz 18: Policies and Prospects for Global Economic Growth

Which one of the following statements is true?

Which of the following is NOT true about dead capital?

When government inefficiencies exist,

The role that dead capital plays in a country's economic growth is that

Countries with the highest degrees of governmental bureaucratic inefficiency index

Dead capital is

Dead capital is

Countries with a high level of bureaucratic inefficiency tend to have low rates of real GDP growth because

When a country has a large amount of dead capital,

The relationship of dead capital to inefficient production is

The following are impediments to economic growth EXCEPT

Economic growth is enhanced when

Extensive government restrictions on the use of capital are likely to

One of the most significant barriers to economic growth in the world's poorest nations is

All of the following are major factors limiting economic growth in developing countries EXCEPT

When government inefficiencies exist and government officials can be bribed, then

When there is a building that is used for production, but no one has clear property rights to it,

The problem of dead capital can be eliminated by

Dead capital is most likely to exist when

The inefficiencies associated with dead capital can