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42-1
Chapter 42 The Economics of Developing Countries Answer Key
Multiple Choice Questions
1. According to the United Nations, approximately what percentage of the world's income
is received by the richest one-fifth of the world's population?
2. Approximately what percentage of the world's income is received by the poorest one-
fifth of the world's population?
3.
Country
Per Capital Income, 2014
A
$ 621
B
14,894
C
31,555
D
3,498
E
2,005
Which of the given nations would be low-income developing countries (DVCs), according
to the World Bank?
4.
Country
Per Capital Income, 2014
A
$ 621
B
14,894
C
31,555
D
3,498
E
2,005
Which of the given nations would be middle-income developing countries (DVCs),
according to the World Bank?
42-3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
advanced countries and developing countries.
Test Bank: I
To p ic :
The Rich and the Poor
Type: Table
5.
Country
Per Capital Income, 2014
A
$ 621
B
14,894
C
31,555
D
3,498
E
2,005
Which of the given nations would be high-income countries (IACs), according to the World
Bank?
6.
Country
Per Capital Income, 2014
A
$ 621
B
14,894
C
31,555
D
3,498
E
2,005
Refer to the table. If per capita income increases by 10 percent over five years in each of
the nations shown, the per capita income gap between country C and country A
42-4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A. will remain the same.
B.
will rise from $30,934 to $34,027.
C. may rise or fall depending on the rate of population growth.
D. will rise from $31,555 to $34,710.
AACSB: Knowledge Application
Blooms: Understand
Di f f i c ult y :
02 Medium
Learning Objective: 42-01 Describe how the World Bank distinguishes between industrially
advanced countries and developing countries.
Test Bank: I
To p ic :
The Rich and the Poor
Type: Table
7.
Country
Per Capital Income, 2014
A
$ 621
B
14,894
C
31,555
D
3,498
E
2,005
Refer to the table. Which of the following might reduce the per capita income gap between
countries A and E?
8. Which of the following is not inversely related to per capita income?
42-5
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B. adult illiteracy rates
C.
per capita energy consumption
D. population growth rates
AACSB: Knowledge Application
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Di f f i c ult y :
02 Medium
Learning Objective: 42-01 Describe how the World Bank distinguishes between industrially
advanced countries and developing countries.
Test Bank: I
To p i c :
The Rich and the Poor
9. Which of these sets of nations consists of high-income economies?
10. Which of these sets of nations consists of low-income developing nations?
11. In 2014, the United States had about percent of the world's population and
produced about percent of the world output.
12. In 2014, the GDP of the United States was approximately
13. Which of the following includes only examples of industrially advanced countries
(IACs)?
42-7
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Di f fi c u l ty :
02 Medium
Learning Objective: 42-01 Describe how the World Bank distinguishes between industrially
advanced countries and developing countries.
Test Bank: I
To p ic :
The Rich and the Poor
14. To be classified as a low-income developing country, annual per capita income in 2014
needed to be
15. Examples of low-income developing countries are
16. The very poorest low-income DVCs typically have relatively
42-8
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
D. high rates of both population growth and economic growth.
AACSB: Knowledge Application
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Di f f i c ult y :
02 Medium
Learning Objective: 42-01 Describe how the World Bank distinguishes between industrially
advanced countries and developing countries.
Test Bank: I
To p ic :
The Rich and the Poor
17. If two nations have different per capita income levels and their rates of economic
growth are identical, then the absolute per capita income differential
18. Most of the world's population lives in
19. Which of the following does not correlate positively with economic growth?
20. The exports of the DVCs consist largely of
21. The DVCs are
42-10
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
advanced countries and developing countries.
Test Bank: I
To p ic :
The Rich and the Poor
22. The absolute income gap between the IACs and the DVCs has
23. Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an
IAC. If both nations realize a 4 percent growth of their real per capita outputs, after one
year the absolute real per capita output gap will
24. If the real GDP of a DVC increases from $600 billion to $630 billion and its population
increases from 200 million to 216 million, its real per capita GDP will
42-11
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
D. decrease by about $19.
AACSB: Knowledge Application
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Di f fi c u l ty :
02 Medium
Learning Objective: 42-01 Describe how the World Bank distinguishes between industrially
advanced countries and developing countries.
Test Bank: I
To p i c :
The Rich and the Poor
25. In recent decades,
26. If population is expanding at the same rate as real output,
27. If the real output of a DVC increases from $200 billion to $260 billion and its
population increases from 100 to 120 million, its real per capita output will have
28. Suppose that Alpha's real output rose from $400 billion in year 1 to $428 billion in year
2. Its growth rate for this period was
29. Over the next 15 years, out of every 10 people added to the world's population will
be born in developing countries.
42-13
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Dif fic ul ty :
01 Easy
Learning Objective: 42-02 List some of the obstacles to economic development.
Test Bank: I
To p i c :
Obstacles to Economic Development
30. Which attitude or custom is the most conducive to long-term economic growth?
31. Which of the following is typically not a problem for low-income DVCs?
32. Increases in the total real output of many DVCs do not increase the nation's standard of
living because
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written consent of McGraw-Hill Education.
C. disguised unemployment in agriculture will persist.
D. surplus farm labor may move from rural areas to industrial areas, causing
unemployment.
AACSB: Knowledge Application
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Di ffi c ul t y:
01 Easy
Learning Objective: 42-02 List some of the obstacles to economic development.
Test Bank: I
To p ic :
Obstacles to Economic Development
33. At the present time, the largest percentage of the national incomes of the low-income
DVCs is used for
34. The populations of the developing nations are growing
35. Underemployment occurs
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written consent of McGraw-Hill Education.
A. when workers do not have jobs.
B. when farm workers become more productive.
C.
when workers are working fewer hours than they desire or when they are working less
productively than they are capable of.
D. in IACs but not in the DVCs.
AACSB: Knowledge Application
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Dif fic ul ty :
01 Easy
Learning Objective: 42-02 List some of the obstacles to economic development.
Test Bank: I
To p i c :
Obstacles to Economic Development
36. Rapid population growth can be an obstacle to economic development
37. Population growth remains high in most DVCs
42-16
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 42-02 List some of the obstacles to economic development.
Test Bank: I
To p ic :
Obstacles to Economic Development
38. The demographic transition view alleges that
39. For DVC per capita incomes to rise, birth rates must first be reduced. This statement
describes the
40. Per capita incomes must first grow for birth rates to decline. This statement describes
the
42-17
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Dif fic ul ty :
01 Easy
Learning Objective: 42-02 List some of the obstacles to economic development.
Test Bank: I
To p i c :
Obstacles to Economic Development
41. The demographic transition concept suggests that
42. The demographic transition view of population growth argues that, on average (and as
perceived by parents), the marginal
43. In the DVCs, underemployment frequently takes the form of
42-18
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C.
farmers whose productivity is very low.
D. craft workers and artisans who are replaced by simple machinery and equipment.
AACSB: Knowledge Application
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Dif fic ul ty :
01 Easy
Learning Objective: 42-02 List some of the obstacles to economic development.
Test Bank: I
To p ic :
Obstacles to Economic Development
44. Which of the following is characteristic of DVCs?
45. The "brain drain" problem in the DVCs refers to the fact that the best-educated workers
46. Capital flight from the DVCs may be caused by
42-19
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B. slow domestic inflation.
C. low rates of domestic taxation.
D.
risks of severe fluctuations in exchange rates.
AACSB: Knowledge Application
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Di ffi c ul t y:
01 Easy
Learning Objective: 42-02 List some of the obstacles to economic development.
Test Bank: I
To p ic :
Obstacles to Economic Development
47. When economists refer to capital flight, they are speaking of an
48. Capital flight is a problem to DVCs because it
49. Capital flight refers to
42-20
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written consent of McGraw-Hill Education.
A. the tendency of large corporations of IACs to build new plants in the DVCs because
labor is cheaper.
B.
DVC citizens accumulating or investing their savings in the IACs.
C. the high international mobility of speculative funds caused by variations in exchange
rates.
D. the tendency of DVCs to overinvest in commercial aircraft.
AACSB: Knowledge Application
Ac c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Dif fic ul ty :
01 Easy
Learning Objective: 42-02 List some of the obstacles to economic development.
Test Bank: I
To p i c :
Obstacles to Economic Development
50. Most of the DVCs find it difficult to accumulate capital goods because
51. All of the following contribute to low investment spending in DVCs except
