ECON 201 True / False Questions
The richest 20 percent of theworld's population receives morethan 75 percent of the world's income, while the poorest20 percent receives less than 2 percentof the world's income.
TRUE
In 2014, the IACs (industrially advancedcountries) had an average per capita income that was about 60 times as high as that of the low-income nations.
TRUE
Japan is a nation that achieved a high standard of living despitehaving a very limitedsupply of naturalresources.
TRUE
China is close to catching up with the United States in its standard of livingas measured by per capita income.
FA LSE
The gap in the standards of living betweenthe IACs (like the U.S., countries of Western Europe,and Japan) and the DVCs of Africa, Latin America,andAsia have been narrowing significantly over the decades.
FA LSE
The presence of large and fast-growing populations in developing countries contributes to lower per capita incomes.
TRUE
The demographictransition view of population growth believesthat slower population growth will lead to rising incomes.
FA LSE
Without an abundant endowment of naturalresources, a nation cannot achieve rapideconomic growth.
FA LSE
Saving is a larger percentage of domestic output in DVCs than in IACs, but the saving is put to poor use.
FA LSE
Capital flight from DVCs (developing countries)tends to offset much of the foreignloans and aid that they receive from IACs (industrially advancedcountries).
TRUE
When technologicaladvances are of the capital-using kind, it is possible for an economy to increaseits productivity without any net investment in capital goods.
FA LSE
The building of a new factory by a corporation would be an example of increasing the infrastructure in a developing nation.
FA LSE
Developing nations tend to have a large entrepreneurial class but not sufficient capitalinvestment.
FA LSE
Land reform (or the reform of land ownership) is a relatively minor institutional obstacle to economic growth in many developing countries.
FA LSE
The vicious circle ofpoverty is based onthe connections between low income, low saving, low investment,andlow productivity.
TRUE
The vicious circle ofpoverty implies that there is nowayto break the circle;the poor nations will always remain poor.
FA LSE
The creation of an adequateinfrastructure in a nation is primarily the responsibility of thepublic sector.
TRUE
The corruption and poor administration that arecommon to the public sectors of many DVCs suggest that government may not be veryeffective in promotingeconomic growth.
TRUE
The industrially advanced nations can assist developing nations by reducing trade barriersand by providingboth private and public capital.
TRUE
An example of direct foreign investment would be thebuilding of a motorcycle factory in China by HondaMotors.
TRUE
In recent years, a greater proportion of privatecapital flows toDVCs has been direct foreign investment rather than loans to DVC governments.
TRUE
The World Bank is the organization to whichDVCs turn as a "last-resort" lendingagency for projectsthat private institutions will not fund.
TRUE
One reasonwhy foreign aid is viewed as harmfulis that it promotesdependency.
TRUE
One policy recommendedbymost economists for promoting economicgrowth in DVCs is the nationalization andprotection of domesticindustries.
FA LSE
One recommended policy that IACs could adopt to helpDVCs is to recruit andhire skilled workers from DVCs for businesses in IACs.
FA LSE
One effectivewaythat IACs can help DVCs is to lower trade barriers on products produced by DVCs.
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