Balance Of Payments, Aid And Foreign Investment MCQs

Option A: lowest among the OECD countries

Option B: higher currently than it was in the 1960s and 1970s

Option C: is equivalent to Holland’s aid

Option D: None of the above statements is true

Correct Answer: None of the above statements is true ✔

Option A: decreasing autonomy of the nation-state involves

Option B: the increasing international integration of markets for goods services and capital

Option C: changes of a traditional culture of a country to a western culture

Option D: giving aid to poor countries to improve their economy politics and social status

Correct Answer: the increasing international integration of markets for goods services and capital ✔

Option A: the transportation and storage cost increased tremendously

Option B: proponents of basic-needs attainment opposed food-aid

Option C: U.S farm interests wanted to reduce surplus grain stocks

Option D: agricultural production suffered excessively due to weather changes

Correct Answer: U.S farm interests wanted to reduce surplus grain stocks ✔

Option A: the brain drains from LDCs to DCs

Option B: the price role of political and credit-market risk in many LDCs

Option C: the law of increasing returns that implies that the marginal productivity of capital is higher in LDCs

Option D: the fat that the DC capital market is perfectly competitive

Correct Answer: the price role of political and credit-market risk in many LDCs ✔

Option A: I and II only

Option B: III and IV only

Option C: I, II and III only

Option D: I, II, III and IV

Correct Answer: I, II, III and IV ✔

Option A: I and II only

Option B: III and IV only

Option C: I, II and III only

Option D: I, II, III and IV

Correct Answer: I, II, III and IV ✔

Option A: is technical aid given by IMF

Option B: is given directly by one country to another

Option C: is aid with repayment in inconvertible currency

Option D: is a loan at bankers’ standards

Correct Answer: is given directly by one country to another ✔

Option A: I and II only

Option B: II and III only

Option C: I and IV only

Option D: None of the above

Correct Answer: I and IV only ✔

Option A: and the dangers of free capital movements for LDCs with poorly developed financial institutions

Option B: and the dangers of a trade deficit

Option C: and the external openness of income growth among the poorest 40 percent of LDCs

Option D: and MNC domination and its effects on income distribution

Correct Answer: and the dangers of free capital movements for LDCs with poorly developed financial institutions ✔

Option A: investors are directly involved in managing the operations

Option B: as in direct investment investors export goods and services abroad

Option C: investors transfer the technology to local investors

Option D: investors have no control over operations

Correct Answer: investors have no control over operations ✔

Option A: technical assistance to stock market and financial market problems

Option B: loans for post-World War II reconstruction

Option C: short-term credit for international balance of payments deficits

Option D: bonds denominated in U.S dollars as a loan to LDCs

Correct Answer: short-term credit for international balance of payments deficits ✔

Option 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

Option B: no effect on economic growth during the simultaneous five-year period but has a significantly negative effect on growth in the subsequent five years

Option C: a significantly positive effect on growth in the subsequent five years

Option D: an exponentially negative effect on growth ten years

Correct Answer: no effect on economic growth during the simultaneous five-year period but has a significantly negative effect on growth in the subsequent five years ✔

Option A: I and II only

Option B: II and IV only

Option C: I, II and III only

Option D: I, II and IV only

Correct Answer: II and IV only ✔

Option A: the capital accounts

Option B: the international balance of payments statements

Option C: the long-term current account

Option D: the trade accounts

Correct Answer: the international balance of payments statements ✔

Option A: own domestic savings and by inflows of capital from abroad

Option B: stock market and fiscal policy

Option C: savings from abroad and financial outflow

Option D: savings and financial liberalization

Correct Answer: own domestic savings and by inflows of capital from abroad ✔

Option A: I and II only

Option B: I, II and III only

Option C: I, II and IV only

Option D: I, II, III and IV only

Correct Answer: I, II and IV only ✔

Option A: I, II and III

Option B: I, II and IV

Option C: II, III and IV

Option D: I, II, III and IV

Correct Answer: I, II and IV ✔

Option A: During the 1980s OECD countries contributed four fifths of the world’s bilateral official development assistance to LDCs

Option B: In the early 1990s the OECD contributed 98 percent of all aid

Option C: The OECD aid increased from $6.9 billion in 1970 to $8.9 billion in 2001

Option D: In 2001, only Denmark Norway, Sweden, the Netherlands, and Luxembourg exceeded the aid target for LDCs

Correct Answer: The OECD aid increased from $6.9 billion in 1970 to $8.9 billion in 2001 ✔

Option A: an economy more open to foreign trade and investment faces a more inelastic demand for unskilled workers

Option B: employers and consumers can more readily replace domestic workers with foreign workers by investing abroad or buying imports

Option C: globalization increases job insecurity

Option D: financial liberalization in LDCs leads to collapse of the economy

Correct Answer: globalization increases job insecurity ✔