Bilateral aid is aid from . . .

one country directly to one other country

The terms of trade must be moving in a country's favour when . . .

export prices are rising at a faster rate than import prices

Economic growth is more likely to lead to economic development if it is accompanied by . . .

redistribution of income to poorer citizens

Which of the following is a long term cause of a change in the terms of trade?

Changes in technological developments within a country

A country has a Human Development Index of 0.94. This country is most likely to have . .

a high level of life expectancy

If the terms of trade of a country have deteriorated, then its . . .

imports have become more expensive relative to exports

Which of the following is not a typical feature of a Less Developed Country?

Migration from urban to rural areas

The best approach to development is now considered to be . .

a balance between planning and free-markets

How might a Less Developed Country best try to prevent 'capital flight'?

Build up investor confidence in local capital markets

FDI may hinder or help development. Which of the following is likely to be positive?

Providing access to new skills and technology

Total foreign direct investment is less than total world investment. The difference is because

investment that does not cross national boundaries

Good governance, security and private property rights are important

pre-conditions for a market economy

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Terms of trade and development

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Review of terms of trade and the development section of the syllabus

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Questions 24

Answers

1
Bilateral aid is aid from . . .
a group of countries to one country with conditions attached
one country directly to one other country
one country to other countries via an international agency
one country directly to a number of other countries
2
The terms of trade must be moving in a country's favour when . . .
there is a rise in both its imports and export prices
the revenue from export earnings exceeds import expenditure
export prices are rising at a faster rate than import prices
there are net capital inflows
3
The reliance of many LDCs on income-inelastic non-oil primary commodities has resulted in . .
rapid development
declining terms of trade
improving terms of trade
rising import volumes
4
The development strategy adopted by most LDCs between the 1950s and 1980s can be described as
market-oriented
capitalist
interventionist
export-led
5
Economic growth is more likely to lead to economic development if it is accompanied by . . .
redistribution of income to poorer citizens
a reduction in government welfare programmes
a greater reliance on international aid
a rapid increase in the population
6
'Development' differs from 'growth' in that development takes account of . . .
output per capita
the economic efficiency of a country
income distribution
shifts in production possibility frontiers
7
Peasant farmers are most likely to be motivated by which of the following?
growth
risk avoidance
profit satisficing
profit maximisation
8
Which of the following is a long term cause of a change in the terms of trade?
Changes in the supply of key inputs to production e.g. oil
Changes in relative rates of inflation
Changes in technological developments within a country
Changes in relative exchange rates
9
A country has a Human Development Index of 0.94. This country is most likely to have . .
a high level of life expectancy
low levels of literacy
a small proportion of its population in the tertiary sector
a rapid rate of population growth
10
Children under the age of 15 form what percentage of the total population in most LDCs?
20% - 25%
10% - 15%
40% - 50%
65% - 75%
11
If the terms of trade of a country have deteriorated, then its . . .
foreign currency reserves have fallen
imports have become more expensive relative to exports
balance of payments has improved
currency has appreciated
12
Which of the following is not a typical feature of a Less Developed Country?
Migration from urban to rural areas
High dependence on primary products
High population growth
A relatively large agricultural sector
13
Which of the following would not lead to economic growth?
Increased immigration of skilled labour
Increased investment in education and training
The drilling of new oil wells
A higher price level
14
The exports of LDCs are most likely to be . .
price elastic in demand
income elastic in demand
price elastic in supply
income inelastic in demand
15
The best approach to development is now considered to be . .
central planning
free markets
a balance between planning and free-markets
import-substitution
16
How might a Less Developed Country best try to prevent 'capital flight'?
Remove controls on the movement of capital between countries
Build up investor confidence in local capital markets
Allow the exchange rate to depreciate
Lower domestic interest rates
17
A policy of import substitution increases the likelihood of . .
monopoly power
greater consumer choice
the use of modern technology
competitive exports
18
FDI may hinder or help development. Which of the following is likely to be positive?
Increasing rural-urban migration
Providing access to new skills and technology
Extracting tax concessions and protection from competition
Inhibiting local enterprise
19
Total foreign direct investment is less than total world investment. The difference is because
investment by developed countries in their former colonies
of inflation
flows of government spending between countries
investment that does not cross national boundaries
20
Each of the following is included in the Human Development Index except . . .
life expectancy
social costs
spending power
literacy
21
Two of the United Nation's Millennium Development Goals relate specifically to . . .
environment
women
financial institutions
education
22
When world prices rise relative to domestic prices, what will tend to happen?
Exports decrease
Imports stay the same
Imports increase
Exports increase
23
Which of the following limits potential long run growth?
The level of aggregate demand
The size of the government sector
The money supply
The supply of factor inputs
24
Good governance, security and private property rights are important
pre-conditions for attracting foreign aid
factors driving the poverty cycle
pre-conditions for a market economy
elements of a planned economy

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