The best explanation for the late 1994/early 1995 collapse of the Mexican peso and
stock market is
(a) free movement of capital internationally is destabilizing for a developing country.
(b) portfolio investments were camouflaging overvalued exchange rates.
(c) debt for equity swaps had created imbalances in the ownership structure of the
economy.
(d) the potential benefits of NAFTA had been oversold.
Answer:
The primary goal of an agricultural extension service is to
(a) bring new areas under cultivation.
(b) increase the yield per hectare.
(c) introduce land reform.
(d) assist rural-urban migration.
Answer:
Children under the age of 15 represent about __________ percent of the population of
developing countries.
(a) 25
(b) 29
(c) 30
(d) 61
(e) 75
Answer:
Which of the following will cause the largest reduction in the birthrate?
(a) the population becomes less religious
(b) public healthcare improves
(c) education becomes more available
(d) an increase in the opportunity cost of a woman’s time
Answer:
The S-curve is used to illustrate
(a) the typical path taken by the current account over time.
(b) economic fluctuations in the economy.
(c) the typical growth path of a developing economy.
(d) the existence of multiple equilibria.
Answer:
The dependency burden is
a. a measure of the degree to which the less developed countries are dependent on the
rich industrial countries.
b. the average number of children that a woman gives birth to during her lifetime.
c. the number of babies born per 1000 persons.
d. the percent of the population that is below 15 and above 65 years of age.
Answer:
The combined GDP of developing countries constitutes approximately
a. 5 percent of global GDP.
b. 20 percent of global GDP.
c. 30 percent of global GDP.
d. 40 percent of global GDP.
Answer:
Credential inflation results from
(a) a combination of cost-push inflation and demand-pull inflation.
(b) rigidities in the industrial sector.
(c) the need to select from among qualified applicants in the modern sector.
(d) all of the above.
Answer:
If the population growth rate is 2%, the incremental capital output ratio is 3, the saving
ratio is 24%, and the depreciation rate is 5%, the rate of growth of income is
(a) 1%.
(b) 2%.
(c) 3%.
(d) 5%.
(e) 8%.
Answer:
An example of an institutional requirement for the operation of effective private
markets is
(a) enforcement of contracts.
(b) the ability of government to correctly project trends.
(c) the ability of advertisers to influence consumers.
(d) all of the above.
Answer:
Which of the following groups is(are) more likely to be poor?
(a) minorities
(b) indigenous people
(c) women
(d) all of the above.
Answer:
A subsistence economy is
a. a very low income economy.
b. an economy in which people make what they consume.
c. an economy in which people receive food for pay.
d. all of the above.
Answer:
The amount of foreign aid in proportion to developed countries’ GNP has
(a) increased over time.
(b) remained fairly stable over time.
(c) decreased over time.
(d) fluctuated widely but has shown no clear trend.
Answer:
The Gini coefficient provides a measure of
(a) the level of poverty.
(b) the level of relative inequality.
(c) disguised unemployment.
(d) the rate of growth.
Answer:
According to the United Nations, Millennium Development Goals Report, the annual
growth in % of slum population from 1990-2001 has been the largest in:
(a) Latin America and the Caribbean
(b) South-East Asia
(c) Sub-Saharan Africa
(d) Southern Asia
Answer:
Why is it impossible that all industries in a developing country qualify as infant
industries?
(a) You cannot have a comparative advantage in everything.
(b) You cannot have an absolute advantage in everything.
(c) This would violate international law.
(d) This would reduce the terms of trade.
Answer:
Evidence presented in the text suggests that birthrates among developing countries are
lower with
(a) higher growth.
(b) higher inequality.
(c) higher GNP per capita.
(d) all of the above.
Answer:
Which of the following is a rationale for development planning?
(a) government failure.
(b) market failure.
(c) failure of consumers to understand their preferences.
(d) all of the above are rationales for development planning.
(e) none of the above are rationales for development planning.
Answer:
The big-push theory argues that coordination failures may arise because of
(a) pecuniary externalities.
(b) technological externalities.
(c) lack of human capital.
(d) all of the above.
Answer:
Which of the following demonstrates international interdependence?
a. the oil shocks
b. the debt crisis
c. global warming
d. all of the above.
Answer:
In recent years, the fertility rate in developing countries has been
(a) declining.
(b) holding steady.
(c) increasing.
(d) showing no particular pattern.
Answer:
Voluntary organizations that work with and on behalf of mostly local grassroots
organizations in developing countries are termed
(a) international organizations.
(b) nongovernmental organizations.
(c) multilateral institutions.
(d) equity organizations.
(e) none of the above.
Answer:
Among the rationales for state owned enterprises is
(a) that the private sector is inefficient.
(b) that there is unemployment of capable managers.
(c) desirability of national control over strategic sectors of the economy.
(d) all of the above.
(e) none of the above.
Answer:
The dependence on the export of one or two primary products for a majority of the
revenue from exports is most severe in countries in
(a) South Asia.
(b) East Asia.
(c) Sub Saharan Africa.
(d) Latin America.
Answer:
The concept of odious debt implies
(a) an excessive debt.
(b) a debt that is not the responsibility of the nation’s people.
(c) a large debt burden.
(d) the total external debt of a nation’s people.
Answer:
If the equilibrium exchange rate is 15 pesos per dollar and the central bank fixes the
exchange rate
at 17 pesos per dollar then we can conclude that the peso is
(a) appreciated.
(b) depreciated.
(c) overvalued.
(d) undervalued.
Answer:
Development economics must have a scope wider than traditional economics because
a. values and attitudes play little role in the pace of development.
b. people in developing societies do less utility-maximizing.
c. transformation of social institutions is necessary for development.
d. all of the above.
Answer:
Development plans have often failed because
(a) they have been insufficiently specific about projects.
(b) they have overlooked noneconomic considerations.
(c) they have been overambitious.
(d) all of the above.
(e) none of the above.
Answer:
The neoclassical counter-revolution school supports
(a) trade restrictions.
(b) state-owned enterprises.
(c) eliminating government regulations.
(d) limitations on foreign investors.
Answer:
Which of the following conditions is violated if there is a free rider problem?
(a) universality
(b) exclusivity
(c) transferability
(d) enforceability
Answer:
Which of the following countries provides the best example of a successful import
substitution development strategy?
(a) Chile.
(b) Taiwan.
(c) Argentina.
(d) Botswana.
Answer:
The underlying assumption of the Harrod-Domar growth model is that
(a) the incremental capital-output ratio is given by k x Y/K.
(b) growth is mainly determined by capital accumulation.
(c) growth can be sustained only if agricultural productivity rises.
(d) developing countries save too much and invest too little.
Answer:
A typical IMF stabilization package involves
(a) erecting barriers against foreign investment.
(b) overvaluing the exchange rate.
(c) liberalization of exchange controls.
(d) a reduction in interest rates.
(e) all of the above.
Answer:
According to the dependence theory, the developing world is known as the
(a) backward areas.
(b) periphery.
(c) first world.
(d) center.
Answer:
Explain briefly the vent-for-surplus theory of international trade. What is the relevance
of this theory to the current development experience of low income economies?
Answer:
Explain why a country’s gains from trade may not accrue to nationals. Indicate the
differential effects on GNP and GDP.
Answer:
Discuss some policies or strategies that would give firms an incentive to substitute labor
for capital within modern production techniques.
Answer:
Recurrent flooding in Bangladesh is causing the land area of the country to shrink. In
what ways might environmental mismanagement play a role in explaining this
phenomenon?
Answer:
What are the major market failures that imply a potential role for state intervention in
financial markets?
Answer:
State and explain three [or some other number chosen by the instructor] reasons why
the scope for further expansion of developing country commodity exports is likely to be
limited.
Answer:
How could the removal of labor market distortions increase employment even if the
elasticity of factor substitution is very low?
Answer:
Why might it be in the direct economic interest of the United States to finance rain
forest conservation programs in the Amazon?
Answer:
It has been said that “underdevelopment is a state of mind.” Comment.
Answer:
Why does multinational corporation investment not necessarily offer the advantage of
domestic employment expansion?
Answer:
Many developing countries have a static comparative advantage in the production of
one or two primary products. In what ways might specialization in these products
contribute to growth and development? In what ways might this fail to contribute?
Answer:
State three country characteristics that encourage and three that discourage economic
integration among developing countries.
Answer:
What is the primary composition/ownership pattern of the private sector in most
developing countries?
Answer:
What are some of the major characteristics of financial repression? To what degree may
financial liberalization be expected to address the issue of inadequate saving?
Answer:
What are the primary determinants of agricultural labor productivity?
Answer:
What are the implications for a successful agricultural development strategy of the
finding that women perform 60 to 90% of all work in the traditional rural areas?
Answer:
Why do NGOs target women borrowers while making micro loans?
Answer: