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26) ________ per person figures can be misleading because they don't consider differences in the
cost of living.
A) Gross domestic product (GDP)
B) Gross national income (GNI)
C) Purchasing power parity (PPP)
D) Human Development Index (HDI)
27) GNI per capita can be adjusted by ________ to account for differences in the cost of living.
A) gross domestic product
B) gross values added
C) purchasing power
D) the total value of goods and services produced
28) The ________ adjustment allows for a more direct comparison of living standards in different
countries.
A) gross domestic product
B) value added
C) gross national income (GNI)
D) purchasing power parity (PPP)
29) GNI and PPP data are useful because they provide a ________ of economic development.
A) static picture
B) dynamic analysis
C) static analysis
D) global view
30) In a ________, the state owns all means of production.
A) mixed economy
B) planned economy
C) market economy
D) totalitarian state
31) The economic freedom associated with a ________ creates greater incentives for innovation
and entrepreneurship than either a planned or a mixed economy.
A) closed economy
B) political economy
C) market economy
D) command economy
32) Which of the following is a legal means by which the state can expropriate the profits from
innovation?
A) demands for money to grant a license
B) expropriation
C) enforcing property rights
D) excessive taxation
33) Some ________ have fostered a market economy and strong property rights protection and
have experienced rapid economic growth.
A) totalitarian regimes
B) command economies
C) dictatorships
D) centrally planned systems
34) Several of the fastest-growing Asian economies adopted more ________ governments during
the past three decades, including South Korea and Taiwan.
A) totalitarian
B) democratic
C) dictatorial
D) socialist
35) The general assertion is that nations investing more in ________ will have higher economic
growth rates.
A) infrastructure
B) centralized urban centers
C) education
D) manufacturing
36) To account for differences in the cost of living, one can adjust GNI per capita by ________,
which allows for a more direct comparison of living standards in different countries.
A) gross domestic product
B) Human Development Index
C) living standards rate
D) purchasing power
37) Which of the following are more conducive to economic growth?
A) democratic regimes
B) totalitarian regimes
C) dictatorships
D) benevolent monarchies
38) In a ________, any individual who has an innovative idea is free to try to make money out of
that idea by starting a business (by engaging in entrepreneurial activity).
A) command economy
B) planned economy
C) market economy
D) mixed economy
39) GNI per person figures can be misleading because
A) they also include barter agreements.
B) they provide a dynamic picture of development.
C) they don't consider differences in the cost of living.
D) they don't consider exchange rate.
40) Which of the following helps in adjusting GNI such that it accounts for the differences in the
cost of living?
A) purchasing power parity (PPP) adjustment
B) Human Development Index
C) debt to GNI ratio
D) consumer price index
41) In some countries, the official GNI per capita measured at PPP data does not reflect the actual
total annual income because
A) it doesn't consider differences in the cost of living.
B) it gives a static picture of development.
C) it fails to include income earned from other countries in the form of dividends.
D) large amounts of economic activity may be in the form of barter agreements.
42) Which of the following was developed by the United Nations to measure the quality of life in
different nations?
A) gross national income
B) Human Development Index
C) purchasing power parity
D) gross domestic product
43) Many countries in Africa score below 0.5 on the Human Development Index. This means that
these countries have
A) few political freedoms.
B) poor quality of life.
C) low purchasing power parity.
D) no gross domestic product.
44) Which of the following is one of the measures that HDI is based on?
A) life expectancy at birth
B) political freedom
C) attainment of housing
D) whether the lowest incomes are sufficient to meet the basic needs of life
45) ________, a Nobel Prize–winning economist, has argued that development is not just an
economic process, but it is a political one as well.
A) Hernando de Soto
B) Karl Marx
C) Samuel Huntington
D) Amartya Sen
