1.

Which of the following best describes the distribution of world income?

World population

Income

Income

Income

Income

(a)

(b)

(c)

(d)

Richest 20%

60%

83%

40%

50%

Second 20

20

12

28

25

Third 20

12

2

12

10

Fourth 20

8

2

12

8

Poorest 20

2

1

8

7


Answer:



2.

The United States has about ___ percent of the world's population and produces about ___ percent of the world output.

A.

20, 30.

B.

3, 45.

C.

10, 30.

D.

5, 25.



3.

Which of the following does not correlate positively with economic growth?

A.

output per capita

B.

life expectancy

C.

the percentage of the population engaged in agriculture

D.

the literacy rate



4.

The exports of the DVCs consist largely of:

A.

high-technology goods.

B.

raw materials and farm products.

C.

manufactured goods.

D.

services and financial capital.



5.

The DVCs are:

A.

located primarily in Northern Europe.

B.

located primarily in Western Europe.

C.

located primarily in Africa, Asia, and Latin America.

D.

more-or-less evenly distributed over the various continents.



6.

The absolute income gap between the IACs and the DVCs has:

A.

remained constant over time.

B.

increased over time.

C.

decreased over time.

D.

increased in nominal terms, but decreased in real terms.



7.

If population is expanding at the same rate as real output:

A.

real per capita output will increase.

B.

real per capita output will decrease.

C.

real per capita output will remain unchanged.

D.

living standards will increase.



8.

Increases in the total real output of many DVCs do not increase the nation's standard of living because:

A.

diminishing returns may be encountered in increasing total output.

B.

population increases may dissipate the increase in real output.

C.

disguised unemployment in agriculture will persist.

D.

surplus farm labor may move from rural areas to industrial areas, causing unemployment.



9.

The populations of the developing nations are growing:

A.

at about 5 percent per year.

B.

at about the same rate as those of the industrially advanced nations.

C.

slower than those of the industrially advanced nations.

D.

faster than those of the industrially advanced nations.



10.

Population growth remains high in most DVCs because:

A.

religious and sociocultural considerations favor large families.

B.

children may provide economic security for aging parents.

C.

children provide agricultural labor in rural areas.

D.

of all of the above reasons.



11.

The "demographic transition" concept suggests that:

A.

effective birth control is the primary prerequisite of DVC income growth.

B.

income growth must first occur before DVC birth rates will decline.

C.

children are economic assets in the IACs, but economic liabilities in the DVCs.

D.

the IACs will have higher birth rates than the DVCs.



12.

Which of the following is (are) characteristic of DVCs?

A.

a large percentage of the labor force is in agriculture

B.

low levels of saving and investment

C.

low labor productivity

D.

all of the above



13.

The "brain drain" problem in the DVCs refers to the fact that the best-educated workers:

A.

are concentrated in the public, rather than the private, sector.

B.

are concentrated in the private, rather than the public, sector.

C.

are concentrated in urban, rather than rural, areas.

D.

have emigrated from the DVCs to the IACs.



14.

It is sometimes difficult to transfer the advanced technologies of the industrialized nations to the DVCs because:

A.

the technologies of the IACs are frequently based on relatively expensive labor and relatively cheap capital.

B.

the resource endowments of the IACs and the DVCs are highly similar.

C.

international patent laws prohibit such transfers.

D.

the technologies of the IACs are frequently based on relatively cheap labor and relatively expensive capital.



15.

Which of the following describes the vicious circle of poverty?

A.

Government spending for public goods is inflationary and this undermines incentives to save and invest.

B.

Higher incomes increase consumption at the expense of capital accumulation, which causes income to fall.

C.

Low per capita incomes cause low levels of saving and investment, which mean low productivity and therefore low incomes.

D.

A growing national income increases the demand for money, which increases the interest rate and reduces investment.



16.

In recent years U.S. foreign aid has been:

A.

less than 1 percent of its output.

B.

about 2 percent of its output.

C.

about 3 percent of its output.

D.

about 5 percent of its output.



17.

Which of the following is not a DVC policy that might increase DVC economic growth?

A.

encouraging direct foreign investment

B.

opening economics to world trade

C.

establishing independent central banks

D.

encouraging emigration of highly skilled workers



18.

Economic growth in the DVCs might increase if IACs:

A.

reduce their tariffs and import quotas.

B.

encourage more immigration of high-skilled DVC workers.

C.

outlaw direct private investment abroad by IAC corporations.

D.

discourage capital flight to the DVCs.



19.

(Last Word) Famines in sub-Saharan Africa:

A.

are solely the result of unalterable weather conditions.

B.

have become less common in recent decades.

C.

are the result of drought, civil strife, overpopulation, and inappropriate public policies.

D.

are solely the result of government policies which overprice agricultural products.



20.

(Last Word) In many of the sub-Saharan African nations:

A.

population is growing more rapidly than food production.

B.

population growth is causing deforestation and diminished land quality.

C.

governments have favored investment in industry and military spending rather than investment for agriculture.

D.

all of the above have been true.




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