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balance of payments aid and foreign investment MCQs

Practise focused balance of payments aid and foreign investment questions with marked answers for exam preparation and subject revision.

balance of payments aid and foreign investment Mcqs

1. The balance on current account ?
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A. equals the absolute value of the balance on capital account

B. includes goods services and unilateral transfers

C. #NAME?

D. is financed by savings

2. Some economists and third-world policy makers criticize MNCs arguing that they have a negative effect on the developing country because they ?
0

A. #NAME?

B. Restrict subsidiary exports when they undercut the market of the parent company

C. increasing the LDCs technological dependence on foreign sources resulting in less technological innovation by local workers

D. Hamper local entrepreneurship and investment in infant industries

3. Japans programs ?
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A. are understaffed politically muddled and administratively complex

B. focus on loans and the grant element of aid is low

C. are biased toward Asia

D. #NAME?

4. Which of the following statement is NOT true about OECD aid ?
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A. In 2001, only Denmark Norway, Sweden, the Netherlands, and Luxembourg exceeded the aid target for LDCs

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

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

D. During the 1980s OECD countries contributed four fifths of the worlds bilateral official development assistance to LDCs

5. Barro and Lee find that ceteris paribus, IMF lending has ?
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A. a significantly positive effect on growth in the subsequent five years

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

C. an exponentially negative effect on growth ten years

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

6. The U.S real food aid, as well as food reserves dropped from the 1960s to the 1980s partly because ?
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A. U.S farm interests wanted to reduce surplus grain stocks

B. the transportation and storage cost increased tremendously

C. agricultural production suffered excessively due to weather changes

D. proponents of basic-needs attainment opposed food-aid

7. The IMF is an agency charged with providing ?
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A. technical assistance to stock market and financial market problems

B. loans for post-World War II reconstruction

C. short-term credit for international balance of payments deficits

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

8. 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 ?
0

A. #NAME?

B. the foreign exchange gap

C. the savings gap

D. the skill limit

9. Dani Rodrik points out that ?
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A. financial liberalization in LDCs leads to collapse of the economy

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

C. globalization increases job insecurity

D. an economy more open to foreign trade and investment faces a more inelastic demand for unskilled workers

10. Aid or official development assistance (ODA) includes ?
0

A. #NAME?

B. technical cooperation

C. developments grants

D. loans with at least 25 percent grant element

11. Carmen Reinhart and Kenneth Rogoff explain the paradox of capital flows from poor to rich countries by ?
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A. the price role of political and credit-market risk in many LDCs

B. the brain drains from LDCs to DCs

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

D. the fat that the DC capital market is perfectly competitive

12. For Harvards Dani Rodrik Globalization involves ?
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A. changes of a traditional culture of a country to a western culture

B. decreasing autonomy of the nation-state involves

C. giving aid to poor countries to improve their economy politics and social status

D. the increasing international integration of markets for goods services and capital

13. Bilateral aid ?
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A. is aid with repayment in inconvertible currency

B. is technical aid given by IMF

C. is a loan at bankers standards

D. is given directly by one country to another

14. An annual summary of countrys international economic and financial transactions is ?
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A. the trade accounts

B. the capital accounts

C. the international balance of payments statements

D. the long-term current account

15. MNCs can help the developing country to ?
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A. Finance a savings gap or balance of payments deficit

B. Employ domestic labor, especially in skilled jobs

C. Obtain foreign technology by adapting existing processes

D. #NAME?

16. U.S total official development assistance to developing countries is ?
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A. None of the above statements is true

B. is equivalent to Hollands aid

C. lowest among the OECD countries

D. higher currently than it was in the 1960s and 1970s

17. I = S + F The equation above states that a country can increase its new capital formation (or investment) through is ?
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A. savings and financial liberalization

B. own domestic savings and by inflows of capital from abroad

C. stock market and fiscal policy

D. savings from abroad and financial outflow

18. Columbias Jagdish Bhagwati criticizes United States administrations inability to distinguish between benefits of free trade ?
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A. and the dangers of free capital movements for LDCs with poorly developed financial institutions

B. and the external openness of income growth among the poorest 40 percent of LDCs

C. and the dangers of a trade deficit

D. and MNC domination and its effects on income distribution

19. In a portfolio investment ?
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A. as in direct investment investors export goods and services abroad

B. investors have no control over operations

C. investors transfer the technology to local investors

D. investors are directly involved in managing the operations

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