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of its GDP to foreign aid or development assistance to DVCs (developing countries) in
2015?
209. Which of the following IACs (industrially advanced countries) gave the largest share
of its GDP to foreign aid or development assistance to DVCs (developing countries) in
2015?
210. Making "soft loans"—loans that may not be self-liquidating—to the very poorest of
the developing countries on relatively liberal terms is the primary function of the
42-80
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Di f f i c ult y :
02 Medium
Learning Objective: 42-05 Describe how industrial nations attempt to aid low-income countries.
Test Bank: II
Topic:
The Role of Advanced Nations
211. The basic role of the International Finance Corporation is to
212. A major criticism of foreign aid to developing nations is that it
213. A major criticism of foreign aid to developing nations is that it
42-81
214. Which of the following would be an example of direct foreign investment in DVCs?
215. A major complaint of DVCs about foreign aid from IACs is that it
216. A recommended policy for DVCs to implement that promotes economic growth is
217. Which of the following is a recommended policy for industrially advanced countries
to adopt in order to foster economic growth in DVCs?
218. Which of the following is considered to be a severe obstacle to economic growth for
DVCs?
42-83
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 42-05 Describe how industrial nations attempt to aid low-income
countries.
Test Bank: II
Topic:
The Role of Advanced Nations
219. A recommended policy for developing countries to stimulate economic growth would
be
220. To stimulate economic growth, it would be best if developing countries adopted
policies to
221. One way through which industrially advanced economies can help DVCs is known as
"official development assistance (ODA),” or more simply,
42-84
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C.
foreign aid.
D. international trade.
222. One suggested policy that industrially advanced nations could adopt to foster
economic growth in less-developed nations would be to
223. The international organization, with 188 member nations, whose major objective is to
help DVCs achieve economic growth is the
42-85
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Topic:
The Role of Advanced Nations
224. A suggested policy for industrially advanced countries to adopt to encourage
economic growth in developing countries would be
225. Trade barriers that restrict imports from developing countries tend to be
226. What is the immigration problem for DVCs?
42-86
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
favor the movement of the least productive DVC workers.
227. In contrast to international development efforts in most of the 20th century, more
recent projects like microfinance, microcredit, and cash transfers in the last few decades
represent a major shift. That is because these recent projects are
228. Recent efforts at providing direct cash transfers to poor individuals in DVCs have
shown which of the following results?
42-87
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 42-04 Discuss the role of government in promoting economic development
within low-income nations.
Test Bank: II
Topic:
The Role of Government
True / False Questions
229. The richest 20 percent of the world's population receives more than 75 percent of the
world's income, while the poorest 20 percent receives less than 2 percent of the world's
income.
230. In 2014, the IACs (industrially advanced countries) had an average per capita income
that was about 60 times as high as that of the low-income nations.
231. Japan is a nation that achieved a high standard of living despite having a very limited
supply of natural resources.
42-88
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: II
Topic:
The Rich and the Poor
232. China is close to catching up with the United States in its standard of living as
measured by per capita income.
233. The gap in the standards of living between the IACs (like the U.S., countries of
Western Europe, and Japan) and the DVCs of Africa, Latin America, and Asia have been
narrowing significantly over the decades.
234. The presence of large and fast-growing populations in developing countries
contributes to lower per capita incomes.
42-89
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: II
Topic:
Obstacles to Economic Development
235. The demographic transition view of population growth believes that slower
population growth will lead to rising incomes.
236. Without an abundant endowment of natural resources, a nation cannot achieve rapid
economic growth.
237. Saving is a larger percentage of domestic output in DVCs than in IACs, but the saving
is put to poor use.
238. Capital flight from DVCs (developing countries) tends to offset much of the foreign
loans and aid that they receive from IACs (industrially advanced countries).
239. When technological advances are of the capital-using kind, it is possible for an
economy to increase its productivity without any net investment in capital goods.
240. The building of a new factory by a corporation would be an example of increasing the
infrastructure in a developing nation.
241. Developing nations tend to have a large entrepreneurial class but not sufficient capital
investment.
42-91
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Remember
Di ffi c ul t y:
01 Easy
Learning Objective: 42-02 List some of the obstacles to economic development.
Test Bank: II
Topic:
Obstacles to Economic Development
242. Land reform (or the reform of land ownership) is a relatively minor institutional
obstacle to economic growth in many developing countries.
243. The vicious circle of poverty is based on the connections between low income, low
saving, low investment, and low productivity.
244. The vicious circle of poverty implies that there is no way to break the circle; the poor
nations will always remain poor.
42-92
245. The creation of an adequate infrastructure in a nation is primarily the responsibility of
the public sector.
246. The corruption and poor administration that are common to the public sectors of many
DVCs suggest that government may not be very effective in promoting economic growth.
247. The industrially advanced nations can assist developing nations by reducing trade
barriers and by providing both private and public capital.
248. An example of direct foreign investment would be the building of a motorcycle
factory in China by Honda Motors.
249. In recent years, a greater proportion of private capital flows to DVCs has been direct
foreign investment rather than loans to DVC governments.
250. The World Bank is the organization to which DVCs turn as a "last-resort" lending
agency for projects that private institutions will not fund.
251. One reason why foreign aid is viewed as harmful is that it promotes dependency.
42-94
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: Understand
Di f fi c u l ty :
02 Medium
Learning Objective: 42-05 Describe how industrial nations attempt to aid low-income
countries.
Test Bank: II
Topic:
The Role of Advanced Nations
252. One policy recommended by most economists for promoting economic growth in
DVCs is the nationalization and protection of domestic industries.
253. One recommended policy that IACs could adopt to help DVCs is to recruit and hire
skilled workers from DVCs for businesses in IACs.
254. One effective way that IACs can help DVCs is to lower trade barriers on products
produced by DVCs.
42-95
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 42-05 Describe how industrial nations attempt to aid low-income
countries.
Test Bank: II
Topic:
The Role of Advanced Nations
