Economics MCQs

Page No. 166

Carmen Reinhart and Kenneth Rogoff explain the paradox of capital flows from poor to rich countries by ?


athe brain drains from LDCs to DCs

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bthe price role of political and credit-market risk in many LDCs

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cthe law of increasing returns that implies that the marginal productivity of capital is higher in LDCs

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dthe fat that the DC capital market is perfectly competitive

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Some economists and third-world policy makers criticize MNCs arguing that they have a negative effect on the developing country because they ?


aincreasing the LDC’s technological dependence on foreign sources resulting in less technological innovation by local workers

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bHamper local entrepreneurship and investment in infant industries

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cincrease unemployment rates from unsuitable technology

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dAll of the above

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View Answer All of the above

MNCs can help the developing country to ?


aFinance a savings gap or balance of payments deficit

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bObtain foreign technology by adapting existing processes

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cGenerate appropriate technology by adapting existing processes

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dAll of these

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View Answer All of these

Bilateral aid ?


a is technical aid given by IMF

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bis given directly by one country to another

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c is aid with repayment in inconvertible currency

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dis a loan at bankers’ standards

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The balance on current account ?


aequals the absolute value of the balance on capital account

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bincludes goods services and unilateral transfers

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cis financed by savings

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dA and B

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View Answer A and B

Columbia’s Jagdish Bhagwati criticizes United States administrations inability to distinguish between benefits of free trade ?


a and the dangers of free capital movements for LDCs with poorly developed financial institutions

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band the dangers of a trade deficit

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cand the external openness of income growth among the poorest 40 percent of LDCs

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dand MNC domination and its effects on income distribution

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In a portfolio investment ?


a investors are directly involved in managing the operations

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bas in direct investment investors export goods and services abroad

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cinvestors transfer the technology to local investors

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d investors have no control over operations

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The IMF is an agency charged with providing ?


a technical assistance to stock market and financial market problems

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b loans for post-World War II reconstruction

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cshort-term credit for international balance of payments deficits

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d bonds denominated in U.S dollars as a loan to LDCs

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Barro and Lee find that ceteris paribus, IMF lending has ?


a negative effect on economic growth during the simultaneous five-year period but has a significantly positive effect on growth in the subsequent five years

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bno effect on economic growth during the simultaneous five-year period but has a significantly negative effect on growth in the subsequent five years

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ca significantly positive effect on growth in the subsequent five years

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d an exponentially negative effect on growth ten years

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Hollis Chenery and Alan Strout identity three development stages in which growth proceeds at the highest rate permitted by the most limiting factors These factors are ?


athe skill limit

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bthe savings gap

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cthe foreign exchange gap

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dAll of these

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View Answer All of these

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