1. The Third World consists of _____.
a.
all communist countries
b.
the nations in the Southern Hemisphere
c.
all former British colonies
d.
all non-English-speaking countries
e.
all less-developed countries
2. Which of the following is an example of the First World?
a.
The West European countries
b.
The Middle East countries
c.
The South Asian countries
d.
The African countries
e.
The Latin American countries
MACR.BOYE.16.87 – ch. 17, 1
United States – Measuring the Economy
The Developing World
3. Which of the following statements about the Third World is true?
a.
Except for Latin America, most Third World citizens live in urban areas.
b.
The culture, politics, and geography of the Third World countries are very similar.
c.
Third World economies are largely dependent on manufacturing industries.
d.
The Third World is made up of non-communist developing countries.
e.
About 80 percent of the population of the Third World countries live in China and India.
MACR.BOYE.16.87 – ch. 17, 1
United States – Measuring the Economy
The Developing World
4. Which of the following is the common link among developing countries?
a.
Low poverty
MACR.BOYE.16.87 – ch. 17, 1
The Developing World
b.
Low unemployment
c.
Low trade deficits
d.
Minimum government interference
e.
Low per capita GDP
5. In absolute terms, poverty is measured as:
a.
b.
c.
d.
e.
Moderate
MACR.BOYE.16.87 – ch. 17, 1
The Developing World
Knowledge
Revised
6. As of 2010, the World Bank classified a country as a low-income economy when its domestic per capita GDP fell
below _____.
a.
$1000
b.
$995
c.
$675
d.
$530
e.
$475
b
Easy
MACR.BOYE.16.87 – ch. 17, 1
United States – Measuring the Economy
The Developing World
Knowledge
7. Which of the following is least likely to be a reason for the difficulty in measuring poverty across countries?
a.
Different currencies
b.
Different customs
Easy
MACR.BOYE.16.87 – ch. 17, 1
The Developing World
Knowledge
Revised
c.
Different living arrangements
d.
Different trade balances
e.
Limited data
8. Which of the following is a basic human need?
a.
Transportation
b.
Healthcare
c.
Money for gas
d.
College level education
e.
Savings
b
Easy
MACR.BOYE.16.87 – ch. 17, 1
United States – Measuring the Economy
The Developing World
Knowledge
9. Which of the following is least likely to be included in a definition of basic human needs?
a.
A minimal level of clothing
b.
A minimal level of health care
c.
A minimal level of savings
d.
A minimal level of shelter
e.
A minimal level of calorie intake
Easy
MACR.BOYE.16.87 – ch. 17, 1
The Developing World
Knowledge
10. Compared to First World countries, developing countries would have _____.
a.
a higher life expectancy
b.
higher productivity rates
c.
lower education levels
d.
lower birthrates
e.
a higher rate of private investment
d
Moderate
MACR.BOYE.16.87 – ch. 17, 1
United States – Measuring the Economy
The Developing World
Knowledge
Revised
11. It is generally true that per capita GNP is:
a.
negatively correlated with labor productivity.
b.
positively correlated with the standard of living.
c.
negatively correlated with the life expectancy rate.
d.
uncorrelated with the literacy level.
e.
positively correlated with the rate of population growth.
b
Challenging
MACR.BOYE.16.87 – ch. 17, 1
The Developing World
Comprehension
12. A narrowly conceived physical quality-of-life index attempts to measure:
a.
the gross national income.
b.
absolute poverty levels.
c.
the level of social injustice.
d.
the level of technological progress.
e.
living standards.
Moderate
MACR.BOYE.16.87 – ch. 17, 1
United States – Measuring the Economy
The Developing World
Knowledge
Revised
13. As of 2008, which of the following countries had a female literacy rate of less than 50%?
a.
India
b.
Greece
c.
Finland
d.
Ethiopia
e.
Namibia
d
Easy
Moderate
MACR.BOYE.16.87 – ch. 17, 1
United States – Reflective Thinking
The Developing World
Comprehension
14. Which of the following is an obstacle to economic growth?
a.
Political instability
b.
Government support for private industry
c.
Slow population growth
d.
Enforcement of private property rights
e.
The inability of special interest groups to block changes in economic policy
MACR.BOYE.16.87 – ch. 17, 1
United States – Measuring the Economy
Obstacles to Growth
15. Which of the following is a reason for the slow economic growth in former colonial nations?
a.
Inadequate foreign aid
b.
A communist system of government
c.
Lack of skilled officials
d.
Religious extremism
e.
High entrepreneurial skills
MACR.BOYE.16.88 – ch. 17, 2
United States – Reflective Thinking
Obstacles to Growth
16. Which of the following is considered a political obstacle to economic growth?
a.
Few government subsidies
b.
Low foreign investment
c.
Lack of entrepreneurial talent
d.
Explosive population growth
e.
Insecure property rights
MACR.BOYE.16.88 – ch. 17, 2
United States – Measuring the Economy
17. In order to encourage domestic saving, it is necessary to have:
a.
a laissez faire economy.
b.
a balanced fiscal budget.
c.
a large number of government subsidies.
d.
a stable system of property rights.
e.
a highly developed banking system.
MACR.BOYE.16.88 – ch. 17, 2
United States – Measuring the Economy
United States – Reflective Thinking
Obstacles to Growth
18. Why is the fear of expropriation an obstacle to economic growth?
a.
Without research and development, no technological advances can be made.
b.
Large government spending causes negative externalities.
c.
Powerful special interest groups have too much control.
d.
No foreign investment comes to the country, because of the lack of guarantees.
e.
The fear of expropriation causes too many resources to be devoted to military spending which is a highly
unproductive sector.
MACR.BOYE.16.88 – ch. 17, 2
United States – Measuring the Economy
United States – Reflective Thinking
Obstacles to Growth
19. A key reason for low foreign direct investment in developing nations is:
a.
the presence of tariff and non tariff barriers on imports.
b.
the fear of exploitation of domestic resources by foreign owners.
c.
the lack of government-operated enterprises.
d.
the high interest rate charged on loans.
e.
the fear of falling inflation rates.
MACR.BOYE.16.88 – ch. 17, 2
United States – Analytic – BB-Legal
United States – Measuring the Economy
Obstacles to Growth
20. For most Third World countries, the key source of capital accumulation is _____.
a.
internal debt
b.
foreign direct investment
c.
domestic business spending
d.
domestic saving
e.
foreign aid
MACR.BOYE.16.88 – ch. 17, 2
United States – Analytic – BB-Legal
United States – Measuring the Economy
Obstacles to Growth
21. Which of the following stands true of corruption?
a.
Payment of money or gifts in order to receive a government service or benefit is a widespread practice only in
less-developed countries.
b.
Corruption reduces growth most directly through government investment in projects with high productivity.
c.
Corrupt governments spend less on capital goods than governments that are less corrupt.
d.
The more competitive a country’s markets are, the fewer the opportunities for corruption.
e.
Private investment is relatively higher in countries in which government expenditure is very high.
MACR.BOYE.16.88 – ch. 17, 2
United States – Analytic – BB-Legal
United States – Measuring the Economy
Obstacles to Growth
22. The reason why public subsidization of industries in less-developed countries causes slow economic growth is that:
a.
when companies face no competition, there is no incentive for them to improve their production.
b.
too much of the taxpayer’s money is spent in these programs.
c.
consumers tend to develop an aversion for the purchase of subsidized goods and services.
d.
subsidies tend to create too much competition for products.
e.
subsidization creates shortage in the product market.
MACR.BOYE.16.88 – ch. 17, 2
United States – Measuring the Economy
United States – Reflective Thinking
23. Which of the following is a recommended strategy to increase productivity of the private sector?
a.
A reduction in government subsidies to producers
b.
An increase in business taxes
c.
An increase in government investment in risky projects
d.
An increase in the money supply
e.
An increase in subsidy on goods and services
24. Which of the following sentences about entrepreneurs stands true?
a.
They tend to be risk-averse individuals.
b.
They are more frequently found in societies that support social conformity.
c.
They help achieve technological progress.
d.
They are more frequently found in the local population of the developing countries.
e.
They usually belong to the traditional elite class.
MACR.BOYE.16.88 – ch. 17, 2
Obstacles to Growth
25. Which of the following is most likely to be a reason for immigrants to become entrepreneurs in developing countries?
a.
They usually hold government positions.
b.
They are poorer than the domestic population.
c.
They are risk-averse.
d.
They have skills and experience that are lacking in poor nations.
e.
They quickly assimilate to their new environment.
MACR.BOYE.16.88 – ch. 17, 2
Obstacles to Growth
26. Societies in which _____ produce more entrepreneurs.
a.
the ratio of immigrants to the local population is high
b.
culture supports individual achievements
MACR.BOYE.16.88 – ch. 17, 2
United States – Reflective Thinking
Obstacles to Growth
c.
individuals are self-interested
d.
immigrants are allowed to hold government positions
e.
immigrants are more intelligent than the local population
27. In many less-developed countries, per capita GDP falls even though real GDP rises, because:
a.
output grows at a slower rate than the population.
b.
the GDP measures in developing countries are always inaccurate.
c.
consumption spending exceeds investment spending.
d.
these countries face an acute trade deficit.
e.
prices increase faster than an increase in actual output level.
MACR.BOYE.16.88 – ch. 17, 2
United States – Reflective Thinking
Obstacles to Growth
28. Less-developed countries are experiencing rapid population growth because _____.
a.
birthrates are rising at a slower rate than mortality rates
b.
birthrates are falling while mortality rates are rising
c.
both birthrates and mortality rates are falling
d.
birthrates are rising while mortality rates are falling
e.
birthrates are constant and mortality rates are rising
MACR.BOYE.16.88 – ch. 17, 2
United States – Measuring the Economy
Obstacles to Growth
29. If rapid population growth reduces the amount of capital per worker, thereby lowering labor productivity, it is referred
to as:
a.
age dependency.
b.
capital budgeting.
c.
investment diversion.
MACR.BOYE.16.88 – ch. 17, 2
United States – Measuring the Economy
Obstacles to Growth
d.
capital disinvestment.
e.
capital shallowing.
30. Rapid population growth leads to age dependency which refers to:
a.
a reduction in the amount of capital per worker, which lowers the productivity of labor.
b.
shifts in government expenditures from the country’s infrastructure to education and health care.
c.
a large number of dependent children whose consumption requirements lower the ability of the economy to
save.
d.
high mortality rates of middle-aged workers that reduces the average amount of investment spending.
e.
survival of the elderly who are dependent on government welfare support.
Easy
MACR.BOYE.16.88 – ch. 17, 2
Obstacles to Growth
Knowledge
31. Which of the following refers to a shift in government spending from the country’s infrastructure to education and
health care?
a.
Capital shallowing
b.
Expropriation
c.
Liberalization
d.
Investment diversion
e.
Import substitution
d
Easy
MACR.BOYE.16.88 – ch. 17, 2
United States – Measuring the Economy
Obstacles to Growth
Knowledge
32. Investment diversion is considered an obstacle to economic growth because:
a.
it would be better to increase the mortality rate of the country, and thus have a higher per capita real GDP.
b.
investment in health care is highly appreciated by the international community.
c.
capital infrastructure automatically eliminates population problems.
d.
the investments in health care affect only the poorest, the least productive inhabitants of a country.
e.
there is no way for a country to build its industries without an increase in investment on infrastructure.
Easy
MACR.BOYE.16.88 – ch. 17, 2
United States – Analytic – BB-Legal
United States – Measuring the Economy
Obstacles to Growth
Knowledge
33. A product in the first stage of production is defined as a(n):
a.
basic need.
b.
investment.
c.
environmental product.
d.
primary product.
e.
transitory product.
Easy
MACR.BOYE.16.89 – ch. 17, 3
Development Strategies
Knowledge
34. Which of the following is a primary product?
a.
Tomato sauce
b.
Chocolate bars
c.
Salt
d.
Breakfast cereal
e.
A desk
MACR.BOYE.16.89 – ch. 17, 3
United States – Reflective Thinking
Development Strategies
35. An inward-oriented strategy is designed to:
a.
expand a country’s export capacity.
b.
lower the production of capital goods.
c.
develop the domestic manufacturing sector.
d.
promote the consumption of imported goods.
e.
improve productivity in the domestic service sector.
MACR.BOYE.16.89 – ch. 17, 3
MACR.BOYE.16.88 – ch. 17, 2
United States – Reflective Thinking
Obstacles to Growth
36. When a country follows an inward-oriented strategy, it tends to produce:
a.
only tertiary goods.
b.
goods in which it has an absolute advantage.
c.
only labor-intensive goods.
d.
goods for which no export barriers exist.
e.
goods that replace foreign manufactured products.
MACR.BOYE.16.89 – ch. 17, 3
United States – Measuring the Economy
Development Strategies
37. The primary objective of inward-oriented strategies is:
a.
to raise government revenue through tariffs and other import taxes.
b.
to lower the domestic price of imports.
c.
to replace imported manufactured goods with domestic goods.
d.
to encourage imports through reduction of tariff and non-tariff barriers.
e.
to encourage the production of those goods in which the country has an absolute advantage.
MACR.BOYE.16.89 – ch. 17, 3
United States – Measuring the Economy
Development Strategies
38. Which of the following is true of import-substitution strategies?
a.
They dominate the strategies of the developing world.
b.
They focus on the production of goods not produced in developed countries.
c.
They focus on the production of exportable goods.
d.
These strategies lower the price of the domestically produced goods than the imported goods.
e.
They generally require the removal of import barriers like tariffs or quotas.
MACR.BOYE.16.89 – ch. 17, 3
United States – Measuring the Economy
Development Strategies
39. Quotas are designed to:
a.
restrict export of domestic goods to foreign markets.
b.
protect domestic producers from higher sales tax.
c.
increase foreign demand for domestic products.
d.
increase domestic demand for foreign products.
e.
protect domestic producers from foreign competition.
MACR.BOYE.16.89 – ch. 17, 3
United States – Reflective Thinking
Development Strategies
40. Which of the following holds true if a country is said to have a comparative advantage in the production of wheat?
a.
The country can produce more wheat than any other nation.
b.
The opportunity cost of producing wheat is the lowest in the country.
c.
The price of wheat is the lowest in that country.
d.
Domestic wheat is of the best quality in the world.
e.
The country can produce only wheat.
MACR.BOYE.16.89 – ch. 17, 3
United States – Reflective Thinking
Development Strategies
41. The replacement of foreign manufactured goods by domestically manufactured goods is called _____.
a.
import swap
b.
export substitution
c.
primary production
d.
import substitution
e.
trade protectionism
MACR.BOYE.16.89 – ch. 17, 3
United States – Measuring the Economy
Development Strategies
42. A tariff imposed on foreign imports will cause _____.
a.
demand for imports to increase
b.
domestic prices of imported goods to rise
c.
market supply of importable goods to increase
d.
domestic prices of imported goods to fall
e.
market supply of domestic goods to decline
MACR.BOYE.16.89 – ch. 17, 3
United States – Reflective Thinking
Development Strategies
43. The practice of imposing import restrictions to protect a newly developing domestic economy typically results in:
a.
a rapid improvement in the standard of living.
b.
expanded trade relations with other nations.
c.
lower prices of domestic products.
d.
allocation of resources away from the primary products.
e.
greater cost efficiency in domestic production.
MACR.BOYE.16.89 – ch. 17, 3
United States – Reflective Thinking
Development Strategies
44. An inefficient manufacturing base is likely to result when:
a.
only those goods are produced in which the domestic economy has a comparative advantage.
b.
a newly developing economy has no international trade controls.
c.
competitive foreign imports are restricted.
d.
the economy produces only those goods in which it has technical expertise.
e.
producers compete solely on the basis of low cost.
MACR.BOYE.16.89 – ch. 17, 3
Development Strategies
45. The economic development strategy aimed at exporting domestically manufactured goods is called a(n):
a.
replacement strategy.
b.
market-oriented strategy.
c.
inward-oriented strategy.
d.
outward-oriented strategy.
e.
future–oriented strategy.
46. The Taiwanese government allows tax credits for domestic producers who compete with manufacturers in First World
nations. This suggests that Taiwan engages in _____.
a.
trade protectionism
b.
export substitution
c.
foreign exchange market intervention
d.
import substitution
e.
voluntary export restrictions
b
MACR.BOYE.16.89 – ch. 17, 3
Development Strategies
47. To follow an outward-oriented strategy, a country that has scarce natural resources and abundant labor supplies should
_____.
a.
export primary goods and import manufactured products
b.
export manufactured goods and impose import restrictions on primary goods
c.
export both primary and manufactured products
d.
export primary goods and impose trade restrictions on manufactured goods
e.
export manufactured products and import primary goods
MACR.BOYE.16.89 – ch. 17, 3
United States – Reflective Thinking
Development Strategies
48. Which of the following would encourage domestic producers to compete internationally?
a.
Tax increases
b.
Policies that make domestic sales more attractive
c.
Cash payments
MACR.BOYE.16.89 – ch. 17, 3
United States – Measuring the Economy
Development Strategies
d.
Expropriation
e.
High-interest loans
49. Which of the following is an argument in favor of outward-oriented strategy?
a.
It leads to a fall in government deficit spending.
b.
It leads to a fall in domestic prices of imported goods.
c.
It helps the economy to grow more rapidly by encouraging exports.
d.
It leads to an increase in the price of exported goods in the foreign markets.
e.
It leads to an increase in the supply of goods and services in the domestic market.
Challenging
MACR.BOYE.16.89 – ch. 17, 3
United States – Reflective Thinking
Development Strategies
Comprehension
Revised
50. What is measured by the ratio of export prices to import prices?
a.
The terms of trade
b.
The productivity ratio
c.
The trade standards
d.
The gains from trade
e.
The balance of trade
Easy
MACR.BOYE.16.89 – ch. 17, 3
Development Strategies
Knowledge
51. The deteriorating-terms-of-trade-argument is based on an assumption that the value of ____ will fall over time.
a.
labor inputs
b.
capital inputs
c.
technology
d.
manufactured goods
e.
primary products
Easy
MACR.BOYE.16.89 – ch. 17, 3
United States – Measuring the Economy
Development Strategies
Knowledge