Category: Balance of Payments, Aid and Foreign Investment

I- equals the absolute value of the balance on capital account
II- is financed by savings
III- is net grants minus remittances
IV- includes goods services and unilateral transfers

A. I and II only
B. II and III only
C. I and IV only
D. None of the above

A. the transportation and storage cost increased tremendously
B. proponents of basic-needs attainment opposed food-aid
C. U.S farm interests wanted to reduce surplus grain stocks
D. agricultural production suffered excessively due to weather changes

A. the brain drains from LDCs to DCs
B. the price role of political and credit-market risk in many LDCs
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

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
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. a significantly positive effect on growth in the subsequent five years
D. an exponentially negative effect on growth ten years

A. investors are directly involved in managing the operations
B. as in direct investment investors export goods and services abroad
C. investors transfer the technology to local investors
D. investors have no control over operations

A. the capital accounts
B. the international balance of payments statements
C. the long-term current account
D. the trade accounts

I- Finance a savings gap or balance of payments deficit
II- Obtain foreign technology by adapting existing processes
III- Generate appropriate technology by adapting existing processes
IV- Employ domestic labor, especially in skilled jobs

A. I and II only
B. III and IV only
C. I, II and III only
D. I, II, III and IV

A. own domestic savings and by inflows of capital from abroad
B. stock market and fiscal policy
C. savings from abroad and financial outflow
D. savings and financial liberalization

A. an economy more open to foreign trade and investment faces a more inelastic demand for unskilled workers
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. financial liberalization in LDCs leads to collapse of the economy

A. During the 1980s OECD countries contributed four fifths of the world’s bilateral official development assistance to 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. In 2001, only Denmark Norway, Sweden, the Netherlands, and Luxembourg exceeded the aid target for LDCs