Question : 21.2   Economic Development: Sources and Strategies 1) All of the following : 1381300

21.2   Economic Development: Sources and Strategies

1) All of the following are factors that limit a poor nation’s economic growth EXCEPT

A) insufficient capital formation.

B) insufficient controls on free trade.

C) lack of entrepreneurial ability.

D) lack of human capital.

2) The vicious-circle-of-poverty hypothesis states that poor countries

A) are unable to save and invest enough to accumulate capital stock that would help them grow.

B) cannot develop because they lack the ability to educate their workers.

C) cannot develop because their economic policies are ineffective.

D) cannot develop because people don’t consume due to lack of goods and services.

3) Capital flight refers to the fact that both human and financial capital

A) flow into developing countries to build much needed infrastructure.

B) leave developing countries in search of a higher rate of return.

C) leave developed countries in search of a higher rate of return.

D) flow into developing countries to invest in risk free investments.

4) A “brain drain” is

A) the tendency of workers in developing countries to reject new technologies.

B) the tendency of talented people in developing countries to get education in developed countries and to stay there after graduation.

C) the impact of poverty on the productivity of workers in developing countries.

D) the impact of malnutrition on education and productivity in developing countries.

5) Compensation sent back to family in the home country by recent emigrants is known as

A) remittances.

B) transaction costs.

C) outsourcing.

D) capital flight.

6) ________ is/are estimated at approximately $100 billion per year.

A) Remittances sent from developed countries to less developed countries

B) Capital flight from the United States

C) Social overhead capital in the United States

D) The value of brain drain flowing into the United States

7) In 2007, remittances from illegal immigrants in the United States to Mexico

A) began to fall because of increased crackdowns on illegal immigration.

B) continued to rise despite increased crackdowns on illegal immigration.

C) began to fall despite a decrease in enforcement of immigration laws.

D) continued to rise because of the decrease in enforcement of immigration laws.

8) Which of the following factors has been suggested as an explanation for the lack of economic growth in many poor nations?

A) insufficient capital formation

B) the supply of human resources is too high.

C) inadequate level of resources

D) a lack of dependence on the already developed nations

9) The lack of capital in developing nations causes

A) labor productivity to remain low.

B) the savings rate to be too high.

C) output to be low in the present but high in the future.

D) consumption rates to be too high.

10) An economy is not able to develop because of a lack of capital. Which of the following strategies would you suggest this economy pursue?

A) lower interest rates

B) impose quotas on how much capital can be imported from other countries to reduce dependency on foreign capital

C) increase the political stability of the economy

D) nationalize private enterprises because the government sector is not motivated by profit maximization