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Quiz 2
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1
Which of the following has helped to offset population growth in DVCs while simultaneously contributing to the deterioration of the overall productivity of their labor forces?
A)capital flight
B)the brain drain
C)foreign direct investment
D)the demographic transition theory
2
Which of the following is not typically given as a reason for high population growth in DVCs?
A)Official government policy explicitly encourages large families
B)Children are a source of farm labor
C)Children provide economic security to their parents in old age
D)Religious and cultural traditions promote large families
3
Which of the following best exemplifies the problem of underemployment in DVCs?
A)Workers work long hours in low-wage factories
B)Up to 20% of urban workers are without jobs in the DVCs
C)Many workers lack sufficient education and training to obtain high wage jobs
D)Lack of demand results in substantial idle time for many small shop owners and vendors
4
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
5
Suppose per capita GDP in a DVC is $2000 and per capita GDP in an IAC is $25,000. If real per capita GDP grows by 2% in both countries, the absolute gap in per capita GDP will:
A)remain unchanged
B)grow by $460
C)grow by $40
D)shrink by $220
6
Which of the following best exemplifies in-kind investment?
A)The World Bank lends a DVC $200 million to build an irrigation project
B)A village directs its surplus agricultural workers to build a new school
C)A multinational corporation embodies its newest technology in a factory it is building in a DVC
D)The government of an IAC sends foreign aid for the purpose of rebuilding damaged roads
7
To encourage economic growth in DVCs, economists typically advocate all of the following actions by the IACs except:
A)redirect foreign aid away from middle-income to the lowest income countries
B)forgive a portion of DVC debt
C)reduce tariffs and import quotas, especially on labor-intensive goods
D)return to the gold standard
8
IACs hinder development in DVCs by maintaining tariffs and import quotas.
A)True
B)False
9
The richest 20% of the world's population:
A)produces about 40% of the world's output
B)earns five times the income of the poorest 20%
C)lives in just 4 wealthy countries
D)receives about 80% of the world's income
10
A nation's real per capita GDP will increase if:
A)real GDP increases at a faster rate than the population
B)the labor force grows at a faster rate than nominal GDP
C)output per worker increases slower than the population
D)nominal GDP increases faster than real GDP





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