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Quiz 3
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1
Comparing income in DVCs and IACs, one finds that:
A)the poorest 50% of the world's population earns less than 2% of the world's income
B)the absolute gap in income between the IACs and the DVCs is growing
C)the combined GDP of all DVCs was about twice the GDP of the U.S. alone
D)average GDP per capita in the DVCs is about half that of the IACs
2
A nation with per capita GDP of $3000 in 2005 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
3
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
4
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
5
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
6
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
7
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 to avoid risk and seek higher returns
8
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
9
A country's acceptance of direct foreign investment leads to lower rates of economic development.
A)True
B)False
10
Which of the following is not typically recommended as part of an economic development strategy for a DVC?
A)Reduce dependence on international trade
B)Control population growth
C)Define and enforce property rights
D)Establish an independent central bank





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