Economics (McConnell), 18th Edition

Web Chapter 39: The Economics of Developing Countries


Low-income DVCs are typically characterized by:
A)high saving rates
B)high rates of population growth
C)high rates of productivity growth
D)substantial underemployment but little unemployment
A nation with per capita GDP of $3000 in 2006 would be classified by the World Bank as a:
A)low-income developing country
B)middle-income developing country
C)high-income country
D)industrially advanced country
One nation has half the per capita GDP of another nation, though GDP per capita is growing at the same positive rate in both countries. As a result, the absolute size of the income gap in the two countries:
A)may either increase or decrease
B)will stay the same
C)will increase
D)will decrease
Projections indicate that during the next 15 years:
A)population growth rates in both the IACs and the DVCs will converge, averaging about 4%.
B)new technology and rapid investment will triple the per capita real GDP of the average DVC
C)world population will double
D)9 out of 10 people added to worldwide population will come from DVCs
The demographic transition view holds that:
A)higher per capita income will bring about a decrease in the population growth rate
B)higher per capita income will bring about an increase in the population growth rate
C)an increase in the population growth rate will bring about an increase in per capita income
D)a decrease in the population growth rate will bring about an increase in per capita income
One factor common to all DVCs that contributes to low income is:
A)insufficient natural resources
B)government corruption
C)limited amounts of capital goods
D)low population growth rates
Capital flight refers to:
A)multinational corporations building factories in DVCs to take advantage of low-wage labor
B)investment in the richer urban areas rather than in the poorer rural and agricultural areas where it is most needed
C)forgiveness of DVC debt by IAC governments
D)the transfer of private savings in the DVCs to accounts in the IACs for purposes of seeking higher returns and lower risks
If the real GDP of a DVC increases by 2% while its population increases by 2.5%, its:
A)real GDP per capita will rise
B)standard of living will rise
C)real GDP per capita will fall
D)economic growth rate will rise
Economic growth will be promoted if policy-makers in a DVC:
A)discourage foreign direct investment
B)increase the rate of inflation as a method for financing more infrastructure
C)nationalize basic industries
D)open their economy to international trade
One factor restraining economic development in low-income countries is the "capricious universe" view, which holds that:
A)religious beliefs overly restrict the length of the workday
B)low incomes are caused by political and economic oppression by the IACs
C)overpopulation and lack of resources reduce the capital-labor ratio
D)there is little correlation between individual work effort and personal rewards
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