1) How do domestic political institutions affect development?
Select one:
a. Colonial powers did not invest in their countries so colonies had little infrastructure at independence.
b. Powerful interest groups at times oppose government policies aimed at promoting growth.
c. Government policies have a significant effect on a country's rate of economic growth.
d. Domestic institutions have little effect on economic development.
e. Small inland countries are disadvantaged with regard to economic growth.

2) As an international factor of economic development that hinders economic development of developing countries, deterioration of Answer is often cited. Critics argue that developing countries are in disadvantage in international economy, because what they produce and export (i.e. agricultural goods) are in very competitive markets while what developed countries produce and export are controlled by a few large firms, giving more control over selling prices to the firms in developed countries.

3) Among the different factors of production, which factor of production in the United States is the most likely to oppose free trade, according to the factor model?

4) Pakistan is facing a potential currency crisis and has gone to the IMF for rescue. The IMF asks the Pakistani government to raise taxes and lower its budget deficit. The IMF conditions are often referred to as:
Select one:
a. austerity.
b. trade adjustment assistance.
c. autarky.
d. concessional finance.
e. obsolescing bargaining.

5) Which of the following best illustrates international monetary affairs?
Select one:
a. Russia increases exports of oil to Western Europe.
b. India increases tariffs on imports.
c. Mexico allows the peso to "float" in relation to the U.S. dollar.
d. South Africa decides to keep using the rand.
e. Ford builds a factory in Brazil.

6)  What is the economic development strategy pursued by East Asian countries since the mid-1960s?

7) A major effect of trade barriers such as tariffs, quotas, and nontariff barriers is:
Select one:
a. aggregate social welfare is increased by keeping wealth within the country.
b. consumers lose from higher prices, while import-competing producers benefit.
c. export-oriented producers are supported, while the effect on consumers is minor.
d. states are no longer allowed to be members of the World Trade Organization.
e. governments become less popular with specialized interest groups when they enact them.

8) As a part of nondiscrimination priciple of the WTO, Answer requires that WTO members to treat domestic and foreign versions of the like product similarly once they enter the domestic market

9) Answer theories predict that initial wealth owing to lucrative natural resources gives rise to ensuing poverty. There are various reasons why having lucrative natural resources can hurt a country's economic development.

10) Given the following exports, which of these is most likely a rich, developed country?
Select one:
a. a country that exports computer chips
b. a country that exports copper
c. a country that exports oil
d. a country that exports shoes
e. a country that exports jeans

11) Why did African countries have policies that benefited the urban elite?
Select one:
a. because the rural population plays no role in economic development
b. because international organizations forced them to implement these policies
c. because most of the population of Africa lived in urban areas
d. because to stay in power, governments had to implement policies that benefited powerful urban interest groups
e. because the traditionally conservative rural elite continually blocked attempted economic reforms

12) The world has witnessed several currency crises in the past, such as the Asian financial crisis in 1997 and the Argentinean crisis in 2002. In a currency crisis, we typically find that:
Select one:
a. it often started in countries using a floating exchange rate system.
b. the currency value of the problematic country would plunge, relieving pressure on those who owed money to foreigners.
c. the fundamental problem was usually domestic recessions coupled with the government's inability to use monetary policy to respond.
d. countries facing a currency crisis often went to the World Bank for rescue.
e. fortunately, a currency crisis most of the time was limited to the problematic country.

13) Which of the following economic actors in Japan and South Korea would prefer the Japanese yen to be strong vis-à-vis the Korean won, rather than to be weak?
Select one:
a. Japanese tourists who travel to Korea
b. Korean manufacturers who have to import machines and parts from Japan
c. Korean consumers who buy imported Japanese cars
d. None of the above.
e. Japanese manufacturers who export to Korea

14)  Why do countries restrict trade?
Select one:
a. Trade restrictions are more important to consumers than to producers of products.
b. Some influential interest groups may benefit from tariffs.
c. Trade restrictions are always the best way to improve a country's overall economy.
d. Free trade hurts industries that make use of the most abundant factor in a country.
e. Trade restrictions usually are the best way to improve a country's overall economy.

15) A key factor of development is whether an encompassing coalition is formed domestically to promote overall welfare. Which of the following makes such a coalition more likely?
Select one:
a. Artificial state boundaries that do not overlap with ethnic boundaries.
b. Wealth concentration.
c. Oligarchical institutions in domestic politics.
d. The state deriving most of its income from oil.
e. The existence of common external threats.

16) Concessional finance refers to loans that are granted:
Select one:
a. to rebel groups who need to mobilize more support.
b. with specific conditions for repayment.
c. from one developed country to another developed country.
d. from a private bank to a sovereign country.
e. to very poor countries at below-market rates.

17) Which of the following is an example of a fixed exchange rate system? Choose ALL that applies.
Select one or more:
a. the gold standard
b. NAFTA
c. European currencies pegged to the Deutsche mark before 2002
d. the World finance system
e. the Bretton Woods system

18) Why would a country want a depreciated currency?
Select one:
a. Depreciation makes a country's exports more competitive.
b. Depreciation makes wages increase.
c. Depreciation makes investment more attractive.
d. Depreciation makes imports cheaper for consumers.
e. Depreciation makes foreign loan repayment cheaper.

19) What is the "resource curse"?
Select one:
a. Having few natural resources at all in a country, which hinders development.
b. Not having oil reserves or sufficient coal deposits for industrialization.
c. Not investing sufficiently in education, so that economic growth is hurt by lack of skills in future adults.
d. Having lucrative natural resources, which can hurt a country's economic development.
e. Colonies being stripped of their valuable natural resources by colonial powers.

20) Which of the following statements is true about economic liberalism?
Select one:
a. Import-substituting industrialization is a viable economic strategy for the Global South.
b. Specialization and trade helps ensure more efficient allocation of resources.
c. Countries can improve their well-being by being self-sufficient. That way they can always get the highest quality products without paying others for them.
d. If a country has an absolute advantage in some activity, it must also have a comparative advantage.
e. If American consumers bought only goods "made in the USA," they would be better off.