Question 1

Differences in stages of development among countries are reflected in a number of ways besides per capita income.

Accepted Answer

A) True 
 B)False

Question 2

Privatization is the

Accepted Answer

A)  process of turning private enterprises into public enterprises
B)  the same as nationalization
C)  process of turning public enterprises into private enterprises
D)  process of turning state-owned enterprises into public enterprises
E)  process of turning sole proprietor enterprises into corporate enterprisesF) A) and E)
G) A) and D)

Question 3

Production and exchange depend on an reliable infrastructure of

Accepted Answer

A)  transportation
B)  communication
C)  sanitation
D)  electricity
E)  All of the answers are correctF) All of the above
G) D) and E)

Question 4

A problem for developing countries is that the prices of primary products fluctuate more widely than do the prices of finished goods because

Accepted Answer

A)  crop supply changes very little despite the weather
B)  crop supply fluctuates with the weather
C)  weather never varies
D)  crops go in and out of fashion as new diets are developed
E)  crop demand fluctuates with the weatherF) A) and E)
G) None of the above

Question 5

The major advantage of a market economy is that

Accepted Answer

A)  it maximizes the need for resource-flow data
B)  prices convey most of the information necessary to coordinate economic activity among firms
C)  data are aimed at central planners
D)  prices are essentially meaningless
E)  All of the answers are correctF) A) and E)
G) All of the above

Question 6

Which of the following is not an example of an institution (rules of the game) ?

Accepted Answer

A)  formal rules of behavior
B)  government takeover of private corporations
C)  a constitution
D)  informal constraints on behavior
E)  traditionsF) B) and C)
G) A) and D)

Question 7

Disappointed with problems caused by being a recipient of foreign aid from donor governments, the country of Upsilon should consider

Accepted Answer

A)  refusing all future offers of aid
B)  privatizing of aid, such as receiving funds from private not-for-profit agencies
C)  becoming a donor instead
D)  seeking even more government-sponsored aid
E)  All of the answers are correctF) A) and E)
G) A) and B)

Question 8

The World Bank sorts countries into the following three major groups:

Accepted Answer

A)  high-income economies, middle-income economies, low-spending economies
B)  high-spending economies, middle-spending economies, low-spending economies
C)  super-high-income economies, middle-income economies, low-income economies
D)  high-income economies, middle-income economies, zero-income economies
E)  high-income economies, middle-income economies, low-income economiesF) C) and D)
G) A) and D)

Question 9

How many countries in the world have failed to come up with the rules of the game that lead to sustained economic growth?

Accepted Answer

A)  none
B)  most
C)  half
D)  one
E)  There is not enough data to answer this questionF) A) and B)
G) A) and E)

Question 10

Imagine that the best and the brightest professionals of the planet Venus migrate to Earth to work. The upside of this brain drain is

Accepted Answer

A)  the remittances sent home to Venus
B)  getting rid of snooty Venetians
C)  not being able to afford the modern machinery that will help the Venetians become more productive
D)  decreased labor supply on Venus
E)  increased income inequality on VenusF) A) and D)
G) A) and C)

Question 11

Social capital is

Accepted Answer

A)  the shared values and trust that promote cooperation in the economy
B)  the buildings and equipment used to produce goods and services
C)  a government regulation aimed at improving health and safety
D)  the accumulated knowledge, skill, and experience of the labor force
E)  the owner's own or borrowed money invested in a businessF) B) and D)
G) D) and E)

Question 12

When foreign aid is tied to purchases of low-priced food from the donor country, farm prices can drop in the developing countries, hurting poor farmers.

Accepted Answer

A) True 
 B)False

Question 13

Labor productivity depends on the

Accepted Answer

A)  quality of the labor
B)  the effectiveness of government
C)  the proportion of the labor force that is unionized
D)  the size of the economy
E)  All of the answers are correctF) A) and E)
G) A) and D)

Question 14

Compared to industrial market countries, developing countries usually have

Accepted Answer

A)  exports consisting mostly of agricultural products and raw materials
B)  faster population growth
C)  higher unemployment
D)  higher rates of illiteracy
E)  All of the answers are correctF) All of the above
G) C) and E)

Question 15

Regarding the institutional requirements of efficient markets,

Accepted Answer

A)  Western economic theory ignores the operation of efficient markets
B)  market economists have an almost perfect understanding
C)  market economists would never take the necessary institutions for granted
D)  those involved in a transition from centrally planned economy must develop a deep appreciation
E)  None of the answers is correctF) All of the above
G) None of the above

Question 16

At the end of the production chain that a typical economy moves up along is

Accepted Answer

A)  raw material
B)  agriculture
C)  hunting and gathering
D)  services
E)  manufacturingF) C) and E)
G) D) and E)

Question 17

If the country of Zorg has a birth rate of greater than 2.2 births per woman, it is likely that Zorg is an industrial market country.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is true about foreign aid provided by the United States?

Accepted Answer

A)  During the last four decades, the U.S. has provided less than $400 million in aid
B)  Most U.S. aid has been coordinated by the Department of Defense
C)  The U.S. Agency for International Development emphasizes short-range plans
D)  The U.S. Agency for International Development concentrates primarily on health, education, and agriculture
E)  Foreign aid is large part of the U.S. federal budgetF) All of the above
G) B) and E)

Question 19

Which of the following transitional economies has become a high-income nation?

Accepted Answer

A)  Czech Republic
B)  Kazakhstan
C)  China
D)  Vietnam
E)  None of the answers is correctF) A) and B)
G) B) and D)

Question 20

The country of Yipi can raise its productivity by investing more in

Accepted Answer

A)  both human and physical capital
B)  human capital only
C)  physical capital only
D)  stable foreign economies
E)  stocks and bondsF) All of the above
G) A) and D)

Exam 21: Economic Development

Which of the following is true about foreign aid provided by the United States?

Correct AnswerverifiedShow Answer

Disappointed with problems caused by being a recipient of foreign aid from donor governments, the country of Upsilon should consider

Correct AnswerverifiedShow Answer

Production and exchange depend on an reliable infrastructure of

Correct AnswerverifiedShow Answer

Differences in stages of development among countries are reflected in a number of ways besides per capita income.

Correct AnswerverifiedShow Answer

Social capital is

Correct AnswerverifiedShow Answer

How many countries in the world have failed to come up with the rules of the game that lead to sustained economic growth?

Correct AnswerverifiedShow Answer

A problem for developing countries is that the prices of primary products fluctuate more widely than do the prices of finished goods because

Correct AnswerverifiedShow Answer

Imagine that the best and the brightest professionals of the planet Venus migrate to Earth to work. The upside of this brain drain is

Correct AnswerverifiedShow Answer

At the end of the production chain that a typical economy moves up along is

Correct AnswerverifiedShow Answer

Privatization is the

Correct AnswerverifiedShow Answer

Regarding the institutional requirements of efficient markets,

Correct AnswerverifiedShow Answer

Which of the following transitional economies has become a high-income nation?

Correct AnswerverifiedShow Answer

Labor productivity depends on the

Correct AnswerverifiedShow Answer

The major advantage of a market economy is that

Correct AnswerverifiedShow Answer

The country of Yipi can raise its productivity by investing more in

Correct AnswerverifiedShow Answer

Compared to industrial market countries, developing countries usually have

Correct AnswerverifiedShow Answer

When foreign aid is tied to purchases of low-priced food from the donor country, farm prices can drop in the developing countries, hurting poor farmers.

Correct AnswerverifiedShow Answer

If the country of Zorg has a birth rate of greater than 2.2 births per woman, it is likely that Zorg is an industrial market country.

Correct AnswerverifiedShow Answer

The World Bank sorts countries into the following three major groups:

Correct AnswerverifiedShow Answer

Which of the following is not an example of an institution (rules of the game) ?

Correct AnswerverifiedShow Answer

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