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


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


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


dthe fat that the DC capital market is perfectly competitive



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


bHamper local entrepreneurship and investment in infant industries


cincrease unemployment rates from unsuitable technology


dAll of the above


View Answer All of the above

MNCs can help the developing country to ?


aFinance a savings gap or balance of payments deficit


bObtain foreign technology by adapting existing processes


cGenerate appropriate technology by adapting existing processes


dAll of these


View Answer All of these

Bilateral aid ?


a is technical aid given by IMF


bis given directly by one country to another


c is aid with repayment in inconvertible currency


dis a loan at bankers’ standards



The balance on current account ?


aequals the absolute value of the balance on capital account


bincludes goods services and unilateral transfers


cis financed by savings


dA and B


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


band the dangers of a trade deficit


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


dand MNC domination and its effects on income distribution



In a portfolio investment ?


a investors are directly involved in managing the operations


bas in direct investment investors export goods and services abroad


cinvestors transfer the technology to local investors


d investors have no control over operations



The IMF is an agency charged with providing ?


a technical assistance to stock market and financial market problems


b loans for post-World War II reconstruction


cshort-term credit for international balance of payments deficits


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



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


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


ca significantly positive effect on growth in the subsequent five years


d an exponentially negative effect on growth ten years



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


bthe savings gap


cthe foreign exchange gap


dAll of these


View Answer All of these

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