Question 1

A development bank
A)accepts deposits from the poor.
B)makes loans for industry expansion.
C)is an agency such as the World Bank.
D) all of the above.
E) none of the above.

Accepted Answer

Development banks primarily focus on providing long-term capital for industry expansion and infrastructure projects rather than accepting deposits from individuals.

Question 2

Why do NGOs target women borrowers while making microloans?

Accepted Answer

Discussed in the chapter in the section on "Microfinance Institutions."

Question 3

The evidence regarding military spending is that it
A)reduces growth.
B)has no effect on growth.
C)increases growth.
D) presents no clear pattern.

Accepted Answer

Military spending reduces growth because it diverts resources away from productive investments.

Question 4

In what ways do the actual and potential roles of central banks differ between developed and developing countries?

Accepted Answer

The answer of In what ways do the actual and...

Question 5

What are some of the major characteristics of financial repression? To what degree may financial liberalization be expected to address the issue of inadequate saving?

Accepted Answer

The answer of What are some of the major characteristics...

Question 6

Compare and contrast the experience of Poland and Chile in their efforts at privatizing SOEs. Make sure you include a background discussion of privatization, methods adopted, and outcomes of privatization in the two countries.

Accepted Answer

The answer of Compare and contrast the experience of Poland...

Question 7

What are the major market failures that imply a potential role for state intervention in financial markets?

Accepted Answer

The answer of What are the major market failures that...

Question 8

What is meant by the term dynamic incentives in the context of making loans to micro borrowers.

Accepted Answer

The answer of What is meant by the term dynamic...

Question 9

What is a development bank? What are some of the reasons they have not had greater success?

Accepted Answer

The answer of What is a development bank? What are...

Question 10

Does it matter how much a developing country saves? Explain why or why not. Discuss theories and evidence on whether developing countries can increase the net savings rate in the economy through public policy. In particular, consider whether this can be accomplished through increased or decreased taxation of one or more types, and increased or decreased government spending of one or more types.

Accepted Answer

The answer of Does it matter how much a developing...

Question 11

Discuss the pros and cons of the recent introduction and expansion of stock markets in the developing countries.

Accepted Answer

The answer of Discuss the pros and cons of the...

Question 12

Why are women considered to be more creditworthy for microloans?

Accepted Answer

The answer of Why are women considered to be more...

Question 13

Among the rationales for state-owned enterprises is
A)the existence of a monopoly.
B)the need for capital formation.
C)the desirability of national control over strategic sectors of the economy.
D) all of the above.
E) none of the above.

Accepted Answer

State-owned enterprises may be established for multiple reasons, including to provide a public service, to support the development of a particular industry, or to maintain national control over strategic sectors of the economy. Therefore, options A, B, and C are all valid rationales for state-owned enterprises.

Question 14

Compare and contrast the workings of the organized and unorganized money markets in developing countries.

Accepted Answer

The answer of Compare and contrast the workings of the...

Question 15

Describe the costs and benefits of privatization of state-owned enterprises. In which cases would privatization seem most advisable?

Accepted Answer

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Question 16

Compare and contrast the level of military spending in developing and developed economies. Compare and contrast the level of military and social spending in developing economies. What evidence is there regarding the link between economic development and military spending?

Accepted Answer

The answer of Compare and contrast the level of military...

Question 17

Among the rationales for state-owned enterprises is
A)that the private sector is inefficient.
B)that there is unemployment of capable managers.
C)desirability of national control over strategic sectors of the economy.
D) all of the above.
E) none of the above.

Accepted Answer

State-owned enterprises are usually created and controlled by the government to manage industries that are considered to be strategic to the economy or national security. The rationale behind this is that the government can ensure that these industries are run in a manner that benefits the country as a whole, rather than just the interests of private investors. This is particularly important for industries such as energy or transportation, where private companies may prioritize profit over public welfare.  The other two options (A and B) are not necessarily the rationales for state-owned enterprises. While there may be instances where the private sector is inefficient or there is a shortage of capable managers, neither of these reasons are the primary justification for state ownership.

Question 18

Explain how group lending works.

Accepted Answer

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Question 19

How can joint liability lower the interest rate for microborrowers?

Accepted Answer

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Question 20

What are the key elements that need to be considered in developing an optimal sequence of financial sector liberalization? Will the order differ across countries? Why or why not?

Accepted Answer

The answer of What are the key elements that need...

Quiz 15: Finance and Fiscal Policy for Development

A development bank