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81. Which of the following is not an example of microfinance?
82. Which of the following is not an example of microfinance?
A. A loan to a restaurant owner for an indoor grill.
83. In the poorest nations, agriculture is likely to contribute as much as ______ percent to total output.
84. Which of the following does not contribute to low farm productivity in poor nations?
85. In order for poor nations to grow out of Stage 1, farm productivity must rise beyond subsistence levels so that
workers can
86. Output per unit of input measures
A. Productivity.
87. Output per labor-hour is used to measure the ________ of labor.
88. Which of the following contributes to an institutional structure that promotes economic growth?
A. Comparative advantage.
89. Which of the following does not contribute to an institutional structure that promotes economic growth?
A. Policy uncertainty.
90. Which of the following does not contribute to a pro-business climate for investors?
A. Secure property rights.
91. In general, countries with well-defined property rights, less government regulation, and lower taxes have
92. Which of the following statements is true concerning comparative advantage?
A. Poor nations typically have a comparative advantage in high-tech but not agricultural goods.
93. The ability of a country to produce a specific good at a lower opportunity cost than its trading partners is
known as
94. Poor nations typically have a competitive advantage in agricultural goods because of
A. Entrepreneurial incentives.
95. A limit on the quantity of a good that may be imported in a given time period is
A. An import quota.
96. Import quotas have a negative impact on poor nations because they make it difficult for poor nations
97. Women in poor countries are more likely to experience all of the following except
A. Restricted property rights.
98. According to Hernando de Soto, poor countries should focus their development policies on all of the following
except
A. Reducing bureaucratic barriers.
99. Which of the following is not part of Hernando de Soto's The Other Path?
100. De Soto's The Other Path encourages poor countries to use their development policies to do all of the
following except
101. In his book The Other Path, de Soto suggests that the key to economic development is
A. Entrepreneurship and market forces.
102. A World View article, "Glaring Inequalities," says that income inequality tends to diminish as a nation develops.
The distribution of income answers the ________ question.
103. One World View article is titled "Glaring Inequalities." Of the countries listed, the greatest inequality in the
distribution of income is likely to occur in
A. Namibia.
104. One World View article is titled "Glaring Inequalities." Of the countries listed, the least inequality in the
distribution of income is likely to occur in
A. United States.
105. A World View article, "The Female ‘Inequality Trap,'" says that in many poor nations the "… returns on female
human capital investment is low." When women are not allowed to work outside the home or to receive an
education, this is referred to as
106. One World View article in the text is titled "Dying for a Drink of Clean Water." By 2015 the U.N.'s Millennium
water goal expects to reduce the percentage of people in the world without safe drinking water by
107. According to Bill Gates, from the World View article titled "The Way We Give: Philanthropy Can Step In Where
Market Forces Don't," more than 90 percent of the money devoted to health research is spent on those who
108. According to the World View article titled "The Way We Give: Philanthropy Can Step In Where Market
Forces Don't," in which of the following ways does philanthropy not improve the market outcome?
109. According to the World View titled "Muhammad Yunus: Microloans," who won the Nobel Peace Prize for
developing microcredit?
110. According to the World View titled "Jeffrey Sachs: Big Money, Big Plans," how does Columbia University
economics professor Jeffrey Sachs expect global poverty rates to be reduced by half by 2015?
A Rich nations must double their foreign aid flows now and then double them again in 10 years, while poor
111. The official U.S. poverty standard was set in 1963 at $3,000 per year for a family of four.
112. The U.S. inflation adjusted poverty threshold in 2014 was set at $35,000 per year for a family of four.
113. According to the official U.S. threshold, 35 percent of Americans live in poverty.
114. The U.S. government counts both cash income and in-kind transfers when determining the poverty rate.
115. In-kind transfers include housing subsidies and food stamps.
116. If the U.S. government considers the value of in-kind transfers, the U.S. poverty rate decreases.
117. American poverty is more about absolute deprivation, and poverty in the rest of the world is more about relative
deprivation.
118. The World Bank defines extreme poverty as income of less than $1.25 per day per person.
119. According to the World Bank definitions, there are more people in the world living in extreme poverty than there
are living in severe poverty.
FALSE
120. According to the World Bank, almost 2.5 billion people are classified as being in severe poverty.
121. Over half of the people in the world who live in extreme poverty live in China and India combined.
122. Poverty is considered to be more permanent in the United States than it is in other nations.
123. The U.N. has established a Millennium Poverty Goal of cutting in half by 2015 the number of people in extreme
global poverty.
FALSE
124. The U.N.'s Millennium Poverty Goal is to reduce the global rate of extreme poverty to 15 percent by 2015, but
125. The two general approaches to reducing global poverty include the redistribution of incomes and
economic growth.
126. The redistribution of private income and wealth within poor nations is sufficient to eliminate global poverty.
127. The U.N.'s Millennium Aid Goal is for nations to increase their foreign aid levels to 0.7 percent of donor country
GDP.
TRUE
128. Currently most developed countries meet or exceed the U.N.'s Millennium Aid Goal for donor country GDP.
129. Denmark and Norway are two countries that currently exceed the U.N.'s Millennium Aid Goal for
donor country’s contribution of GDP.
130. If all developed countries were willing to meet the U.N.'s Millennium Aid Goal for foreign aid, this
would eliminate global poverty.
FALSE
131. Economic growth is the key to ending global poverty.
132. Because poverty is so pervasive, poor countries are not able to experience economic growth.
133. The standard of living for poor countries will not increase if the population growth exceeds economic growth.
134. If women are not allowed to own property or inherit wealth but men are, this is an example of
comparative advantage.
135. An inequality trap has a negative impact on human capital development.
136. Lack of access to sanitation and inadequate medical care have a negative impact on the development of
human capital.
TRUE
137. According to Rostow's stages of economic development, in order to move beyond Stage 1, a poor country
must improve education and health care for the masses.
TRUE
138. Providing basic health care and education for poor countries is cost-prohibitive.
139. By reducing consumption expenditures, poor nations should be able to completely finance their own capital
investment.
FALSE
140. According to Rostow's stages of economic development, poor nations must increase their farm productivity so
that some workers can leave farming and move into other industries.
141. For poor countries, a lack of capital and poorly developed infrastructure contribute to low farm productivity.
142. Well-established property rights and a pro-business climate are a step in the right direction, but ultimately they
do little to encourage economic growth.
143. Free trade with other countries allows poor nations the opportunity to exploit their comparative advantage
in agricultural goods.
144. In his book The Other Path, de Soto suggests that countries will grow more quickly if governments
limit entrepreneurship.
FALSE
145. In his book The Other Path, de Soto suggests that countries will grow more quickly if bureaucratic barriers to
free enterprise are reduced.
TRUE
146. Developing infrastructure and ensuring that property rights will be protected can help a poor country grow
more quickly according to de Soto's book The Other Path.
147. The developing world has been adamant that rich nations abandon farm subsidies in order to get a global trade
deal both sides say they want.
TRUE
149. Explain the difference between poverty in the United States and poverty in the rest of the world.
149. What is the U.N.'s goal for foreign aid to poor countries? Are most countries currently meeting this
goal? Explain.
150. How do population growth and economic growth impact global poverty?
151. What is human capital, and what factors contribute to human capital development?
152. What is microfinance, and how can it contribute to economic growth?
Chapter 23 Test Bank Summary
Category
# of Questions
AACSB: Analytic
27
AACSB: Reflective Thinking
125
Accessibility: Keyboard Navigation
147
Blooms: Analyze
27
Blooms: Remember
54
Blooms: Understand
71
Difficulty: 01 Easy
53
Difficulty: 02 Medium
72
Difficulty: 03 Hard
27
Learning Objective: 23-01 How U.S. and global poverty are defined.
43
Learning Objective: 23-02 How many people in the world are poor.
9
Learning Objective: 23-03 What factors impede or promote poverty reduction.
100
Topic: AMERICAN POVERTY
20
Topic: ECONOMIC GROWTH
66
Topic: GLOBAL POVERTY
28
Topic: GOALS AND STRATEGIES
9
Topic: INCOME REDISTRIBUTION
16
Topic: THE ECONOMY TOMORROW
4
Topic: WORLD VIEW
9
