Developing Countries: Growth, Crisis, and Reform
Developing Countries: Growth, Crisis, and Reform
Multiple Choice Questions
1. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would Pakistan and India fall under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Pakistan and India fall between lower-middle and upper-middle
Answer: A
2. While many developing countries have reformed their economies in order to imitate the success of the successful industrial economies, the process remains incomplete and most developing countries tend to be characterized by all of the following except:
A. Seigniorage
B. Control of capital movements by limiting foreign exchange transactions connected with trade in assets.
C. Use of natural resources or agricultural commodities as an important share of exports.
D. A worse job of directing savings toward their most efficient investment uses.
E. Reduced corruption and poverty due to limited underground markets.
Answer: E
3. Average per-capita GNP in the richest, most prosperous economies is ___ times that of the average in the ____ economies.
A. 95 and low (poorest) income
B. 95 and lower-middle income
C. 73 and lower-middle income
D. 55 and low (poorest) income
E. 63 and low (poorest) income
Answer: E
4. Compared with industrialized economies, most developing countries are poor in the factors of production essential to modern industry: These factors are
A. capital and skilled labor
B. capital and unskilled labor
C. fertile land and unskilled labor
D. fertile land and skilled labor
E. water and capital
Answer: A
5. The main factors that discourage investment in capital and skills in developing countries are:
A. political instability, insecure property rights
B. political instability, insecure property rights, misguided economic policies
C. political instability, misguided economic policies
D. political instability
E. insecure property rights, misguided economic policies
Answer: B
6. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would sub-Saharan Africa fall under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Sub-Saharan Africa falls between lower-middle and upper-middle
Answer: A
7. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would mainland China fall under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
Answer: B
8. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would the smaller Latin American and Caribbean countries fall under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Smaller Latin American and Caribbean countries fall between low income and lower middle income
Answer: D
9. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would the Saudi Arabia falls under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Saudi Arabia falls between low income and lower middle income economies
Answer: B
10. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would the Turkey falls under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Turkey falls between low income and lower middle income economies
Answer: B
11. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would the Poland, Hungary, and the Czech and Slovak Republics fall under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Poland, Hungary, and the Czech and Slovak Republics fall between low income and lower middle income economies
Answer: B
12. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would Malaysia falls under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Malaysia falls between low income and lower middle income economies
Answer: B
13. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would Israel falls under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Israel falls between low income and lower middle income economies
Answer: C
14. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would Kuwait falls under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Kuwait falls between low income and lower middle income economies
Answer: C
15. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would Singapore falls under?
A. Low-income
B. Upper middle- income
C. High-income
D. Lower middle-income
E. Singapore falls between low income and lower middle income economies
Answer: C
16. The upper middle-income countries enjoy only about ____ of the per-capita GNP of the industrial group.
A. 20 percent
B. 15 percent
C. 10 percent
D. 5 percent
E. 30 percent
Answer: A
17. In general, one expects that life expectancy reflect international differences in income levels. Do the data support such a claim?
A. Average life span falls as relative poverty increases
B. Average life span increases as relative poverty increases
C. There is no statistically significant relationship between the two
D. The relation is not very strong
E. The relationship looks more like a U-shape.
Answer: B
18. When one compares per-capital output growth rates among countries,
A. One needs to correct the data to account for departures from purchasing power parity
B. Such corrections are often not necessary
C. Such corrections are sometimes necessary
D. The evidence whether such corrections are necessary are vague
E. Such corrections are not necessary
Answer: A
19. Over the period 1960 – 1992, the United States economy grew at roughly
A. 2 percent
B. 3 percent
C. 4 percent
D. one percent
E. 3.5 percent
Answer: A
20. Over the period 1960 – 1992, Canada grew relative to the United States economy
A. more
B. less
C. the same
D. The Canadian economy grew by one percent
E. The Canadian economy grew by 2 percent
Answer: A
21. Over the post-war era, the tendency for gaps between industrial countries’ living standards
A. disappeared
B. stayed the same
C. increased
D. decreased
E. hard to tell from the data
Answer: A
22. Over the post-war era, the tendency for gaps between all countries’ living standards
A. disappeared
B. stayed the same
C. increased
D. decreased
E. hard to tell from the data
Answer: E
23. Over the post-war era, poorer countries grew
A. faster
B. slower
C. stayed the same
D. no general tendency can be found
E. Grew faster, then grew slower
Answer: D
24. Countries in Africa have grown at rates far _____ those of the main industrial countries.
A. below
B. above
C. the same
D. above at the beginning of the period and below at the end of the period
E. below at the beginning of the period and Above at the end of the period
Answer: A
25. Since 1960, Botswana in Southern Africa enjoyed an average per-capita growth rate well _____ the average African countries
A. above
B. below
C. the same
D. above at the beginning of the period and below at the end of the period
E. below at the beginning of the period and above at the end of the period
Answer: A
26. Since 1960, South Korea and Singapore enjoyed an average per-capita growth rate well _____ the average industrialized world
A. above
B. below
C. the same
D. above at the beginning of the period and below at the end of the period
E. below at the beginning of the period and above at the end of the period
Answer: A
27. Until recently, per-capita income increased in East Asian countries such as Hong Kong, Singapore, South Korea, and Taiwan by ___ fold every generation
A. 2
B. 3
C. 4
D. 5
E. 1
Answer: D
28. Since 1960, South Korea and Singapore enjoyed an average per-capita growth rate well _____ the average industrialized world
A. above
B. below
C. the same
D. above at the beginning of the period and below at the end of the period
E. below at the beginning of the period and above at the end of the period
Answer: A
29. Between 1960 and 1992, the annual growth rate in percent per year was the highest in
A. Canada
B. United States
C. Brazil
D. Honk Kong
E. South Korea
Answer: E
30. Seigniorage refers to
A. real resources a government earns when it prints money to use for spending on goods and services
B. nominal resources a government earns when it prints money to use for spending on goods and services
C. real resources a government earns when it prints money
D. nominal resources a government earns when it prints money
E. real resources a government earns when it issues bonds to use for spending on goods and services
Answer: A
31. In developing countries, exchange rates tend to be
A. floating with some government intervention
B. pegged
C. hard to tell from the data
D. run by currency boards
E. flexible
Answer: B
32. Most developing countries have tried to
A. liberalize capital movement
B. control capital movements
C. hard to tell from the data
D. in the 1960’s and 1970s control, now to liberalize
E. in the 1960’s and 1970s liberalize, now to control
Answer: B
33. For many developing countries, natural resources or agricultural commodities make up _____ share of exports
A. close to zero
B. not important
C. hard to tell
D. an important
E. close to 5 percent
Answer: D
34. In general, the development of underground economic activity ____ economic efficiency
A. hinders
B. has no effect
C. aides
D. hard to tell, sometime hinders, sometimes aides
E. None of the above.
Answer: A
35. One should expect ______relationship between annual per-capita GDP and an inverse index of corruption
A. weak and negative
B. weak and positive
C. strong and negative
D. strong and positive
E. no relationship
Answer: D
36. According to Transparency International’s 2000 rankings, the cleanest (least corrupt) country in the world was
A. USA
B. France
C. Britain
D. Canada
E. Finland
Answer: E
37. According to Transparency International’s 2000 rankings, the most corrupt country in the world was
A. South Africa
B. Malaysia
C. Singapore
D. Nigeria
E. Argentina
Answer: D
38. In developing economies, national saving is often ___ relative to developed economies
A. high
B. the same
C. hard to tell
D. low
E. low for the very poor countries and high for the more developed
Answer: D
39. Industrial countries _____
A. have defaulted on their foreign obligations
B. have never defaulted on their external debts
C. rarely defaulted on their foreign obligations
D. defaulted on their foreign obligations only in the nineteen century
E. defaulted on their foreign obligations only in the twenties century
Answer: A
40. The word tablita refers to
A. Spanish food
B. devaluation in Chile
C. devaluation in Argentina
D. devaluation in Uruguay
E. crawling peg regime in the Southern Cone countries
Answer: E
41. The Convertibility Law of April 1991 in Argentina
A. pegged the Argentinean currency to the US dollar at a ratio of one to one.
B. pegged the Argentinean currency to the US dollar at a ratio of one to two.
C. pegged the Argentinean currency to the US dollar at a ratio of one to 0.5.
D. represents an era of floating exchange rate in Argentina
E. pegged the Argentinean currency to the British pound at a ratio of one to one
Answer: A
42. The $50 billion emergency loan orchestrated by the U.S. Treasury and the IMF to Mexico in 1994
A. was a disastrous policy for Mexico
B. avoided a disaster to the Mexican economy
C. did not affect Mexico in the short run
D. did not affect Mexico in the long run
E. was ineffective both in the short and long runs
Answer: B
43. Based on 1988 data, the trade share in Singapore is approximately
F. 1
G. 2
H. 3
I. 3.5
J. 0.5
Answer: D
44. Based on 1988 data, the trade share in Hong Kong is approximately
A. 1
B. 2
C. 3
D. 3.5
E. 0.5
Answer: C
45. Based on 1988 data, the trade share in Malaysia is approximately
A. 1
B. 2
C. 3
D. 3.5
E. 0.5
Answer: A
46. Based on 1988 data, the trade share in Latin American countries is approximately
A. 1
B. 2
C. 0.5
D. 0.25
E. 0.0
Answer: D
47. Brazil’s 1999 crisis was relatively short lived because
A. Brazil’s financial institutions had avoided borrowing all together
B. Brazil’s financial institutions had avoided heavy borrowing in local currency
C. Brazil’s financial institutions had avoided heavy borrowing in dollars