SECTION A MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) The article about Africa entitled "Bulging in the Middle" noted that there were four causes of Africa's rise. Three of the four are listed here -which one does not belong?
A) technology having large effects B) the right kind of population growth
C) better governance and economic management D) greatly increased agricultural productivity
2) There is a messy, intermittent, and sometimes sadly violent North -South divide across central Africa between
A) Christian and animist (local African) religions B) Sunni and Shiite Moslems
C) oil -rich states and the others D) Muslim and Christian terrritories
3) Nigeria has lost a very great deal of money to corruption and incompetence. The amount involved is, very roughly:
A) Hundreds of millions of dollars B) Hundreds of billions of dollars
C) Tens of millions of dollars D) About 2.5 to 3.0 trillion dollars
4) Given the large debt increases in the last 20 years, why have we not seen even more sovereign defaults among LDCs (and, for that matter, OECD countries)?
A) high real interest rates
B) the pattern of declining interest rates
C) The successful implementation of austerity programs and taxes on the well -off in LDCs
D) The massive debts have been offset by huge debt forgiveness totals
5) The IMF was accused in one article of hypocrisy because it advocated
A) austerity in rich countries and spending in poor ones
B) austerity at all times and places
C) austerity in poor countries and spending in rich ones
D) printing money when necessary to kick -start dormant economies
6) Alexander Sack wrote that debt was odious when
A) The funds originally loaned had not been used in "the interests of the State."
B) The interest rates charged were so high as to be odious
C) A significant fraction of the money had been stolen by corrupt officials
D) Repaying that debt would result in significant social hardship
7) Easterly established that more indebted countries were characterized by all of these except
A) A lower black market premium
B) Smaller bank systems
C) A faster rate of asset sales
D) New borrowing that exceeded any debt relief given
8) Easterly pointed out that in some governments, the divisions across ethnic groups result in a version of the
A) negative externality problem B) natural monopoly problem
C) common property problem D) prisoner's dilemma
9) The divisions cited in Easterly's Chapter 13 could be across ethnic groups, or just across wealthy vs. poor, landlords vs. tenants, etc. Easterly argued that forcible redistribution lowers growth, but your instructor noted that the tremendous growth in East Asia began with
A) the imposition of very progressive tax systems that hit the rich hard
B) land reforms that made landlords sell at below market value
C) a large increase in conditional cash transfers to help those at the bottom
D) nationalization of industrial groups such as Japan's "Keiretsu."
10) The faction -driven overspending mentioned in the discussion of E Ch 13 tends to be made even worse by all these factors except:
A) Old people vote
B) Young people don't vote much
C) Those who would gain from spending tend to represent a more concentrated group than taxpayers as a whole
D) Autocratic, one -party rule
11) According to Easterly, government policies that can kill growth include everything BUT:
A) high budget deficits B) merit -based hiring for civil service jobs
C) trade restrictions D) excessive taxes on winners
12) Public goods must be produced by government because no private entity will pay for them, barring altruism. Public goods are described as being:
A) Rival in use and excludable B) non -rival in use and excludable
C) Non -rival in use and non -excludable D) Rival in use and non -excludable
13) Clare Lockhart mentioned all of these errors or bad decisions by the "aid community" in Afghanistan EXCEPT
A) assuming locals were incapable of some work B) overpaying for local NGO labour
C) almost ignoring the existing civil service D) encouraging a government budget process
14) Jeffrey Sachs feels that many poor countries are stuck in a poverty trap, and that the solution for it is
A) Land reform, basic health care, improved governance
B) a one -time injection of aid, targeted to roads, bridges, and other transport infrastructure
C) a one -time injection of aid, targeted to overcome certain threshold levels of capital, intellectual capital, basic governanace, etc.
D) a guaranteed annual income scheme
15) The aid figures we studied showed that in general, received too little official development assistance, while seemed to get too much (all on a per -capita basis).
A) Oil exporting states, Sub -Saharan Africa B) Sub -Saharan Africa, Oil exporting states
C) Sub -Saharan Africa, East Asian states D) Sub -Saharan Africa, Central Asia
16) Dambisa Moyo wants to put an end to:
A) cash or cheap loans flowing to LDC governments from other governments and multilateral institutions
B) food or medical aid delivered during times of crisis (e.g. earthquakes, tsunamis, etc.)
C) exploitative foreign direct investment
D) the work of NGOs such as Oxfam, Save the Children and the Foster Parents' Plan
17) One critic of the Millenium Village project noted that when evaluating the effectiveness of the effort,
A) Benefits were overmeasured
B) It was unclear how persistent the project's benefits would be at village level
C) The controls were selected in a potentially biased manner
D) Costs were undermeasured
18) The current trade dispute is about many things, but the biggest area of disagreement is
A) manufactured goods B) agriculture
C) investment D) services
19) The Cato institute speaker argued that the rich world should
A) cut tariffs unilaterally for their own benefit
B) leave tariffs at their present level, unless China and other LDCs agree to limit the taking of intellectual property
C) raise tariffs to counter the undervalued Chinese currency (among others).
D) raise tariffs to raise cash, in order to cover the massive budget deficits
20) The government of Ghana appeared to
A) collect a very significant gold royalty and very little in corporate tax
B) collect a very minimal gold royalty and very little in corporate tax
C) collect a minimal gold royalty and a moderate amount of corporate tax
D) collect a cost -sensitive gold royalty
21) The government of one West African country recently changed the royalty on their biggest foreign exchange earning export from ____to _____ and then to _______ percent
A) 12, 16, 13 B) 3, 6, 5 C) 3, 5, 6 D) 22, 32, 26
22) Royalty rate schemes should be designed to do all of the following except
A) protect the seller against locking in at a low price
B) allow legitimate cost increases to increase the per -unit royalty
C) protect the buyer against locking in at a high price
D) allow legitimate cost increases to reduce the per -unit royalty
23) China has made some deals in Africa in which they provide in return for oil or other resources
A) governmental advice and technical staff B) rare earth minerals
C) completed infrastructure D) their own currency, the Yuan
24) China has seemingly paid higher than historic prices for oil and other resources recently. According to your instructor, China does this for all of the following reasons except:
A) A desire to lock up necessary resources
B) Their doubts regarding the theory of "peak oil"
C) A desire to convert US -dollar denominated assets to anything else
D) A belief in rapid future economic growth in China and other big LDCs
25) The Oildrum article that reviewed reserve issues pointed out that, 30% of the way into the time period being studied, only about of the expected amount of oil had been found.
A) 5 -6% B) 8 -10% C) 12 -13% D) 17 -20%
26) When oil prices ran up to a very high level in the last decade, the international oil majors
A) Made less income because of this increase in the cost of their most important input
B) Made about the same annual income because they just passed on the cost increase to their customers
C) Significantly reduced production in response to that hike, since customers bought much less
D) Made very high incomes, by increasing the prices of fuels to more than cover the increased cost of oil
27) The Japanese land reform ended up providing land to the former sharecropping farmers very cheaply primarily because
A) They assumed that returns from the land would end in 10 years
B) The SCAP used a fixed -rate mortgage structure, when a lot of inflation was anticipated
C) The SCAP deliberately underestimated the value of annual production per unit of land
D) The SCAP simply reduced the amount paid to the former landlords by an arbitrary 40%
28) The amount paid for land in a redistribution scheme should be based on the present value of
A) gross farm revenue, less non -labour and required labour costs
B) gross farm revenue less non -labour costs
C) future farm costs
D) gross farm revenue
29) Land reform is really just part of an overall system that could include all of the following except
A) progressive income tax B) price restrictions on monopoly firms
C) a basic low -income program D) targeted export subsidies
30) Your instructor argues that the problem with most land reform efforts now under way is that they are
A) designed to pay market value B) designed to pay more than market value
C) designed to pay less than market value D) badly administered
31) External obstacles to LDC growth include all of these except:
A) Progressive tariffs in the OECD countries B) Monopsony buying by commodity processors
C) Black market premiums D) The willingness of OECD buyers to pay bribes
32) Your instructor argues that in recent decades we have seen
A) Commodity prices weakening and the margins available in manufacturing declining
B) Commodity prices strengthening and the margins available in manufacturing declining
C) Commodity prices weakening and the margins available in manufacturing increasing
D) Commodity prices strengthening and the margins available in manufacturing roughly unchanged
33) Export -led growth in manufactured goods may not come as easily as in the past, because of all of these except
A) The OECD countries are broke and have enormous unfunded liabilities
B) There are more countries competing for manufacturing work
C) Manufacturing technology is easily disseminated across the internet
D) There are barriers to imports among the LDCs
Section B "short" answers, do three questions. Choose only 3 of the 6 questions - if you write about more than three, please make it clear which ones you want marked!
34) Debt and Debt Forgiveness. Discuss the process of debt accumulation in poor countries, i.e. how loans are granted, fall behind in payment, and eventually often lead to a crisis and perhaps "debt relief." How can a negative cycle be avoided? Should we be granting debt relief, and if so, on what terms? What does Easterly document about high-debt countries? What rich world group never seems to bear its share of losses when debts are forgiven?
35) Government Policies What are the policies Easterly cites as desirable? Conversely, what are some of the ways in which "Governments Can Kill Growth," as the chapter title put it? Discuss any of the good or bad policies listed on the last day of class. Use any examples to illustrate good and bad policy regimes. Be as specific as you can please, and try to discuss bad fiscal/financial policy in particular.
36) Aid and related topics. What are the conditions under which aid programs can be successful? What are some of the common problems? Is aid generally effective? Would you side with Easterly/Moyo or Sachs in the aid debate, and why?? Please add a small description or discussion of ONE OF the following three topics: Gates Foundation, Clinton Global Initiative, or the Clare Lockhart audio discussion.
37) Royalties. What are the general principles involved in setting royalties? What are the specific goals of the sellers? The buyers? What are the three market structures we see in oil, and what are the potential benefits and problems with each? What variable will firms use to judge where to place their money? What problems can lead to imperfect collection of royalties? How do royalties differ from taxes? Discuss the particular example of gold in Ghana.
38. Land Reform. Please describe and discuss land reform. Provide whatever details you can recall regarding the main example we covered. What circumstances made this possible? What are the obstacles? Who would benefit? Who would lose? What other steps could be taken as part of an overall "wealth reform"? What is the difference between "fair market" land reform and what was done in the 1940s and 1950s in Asia? What is the justification for an Asian-style land reform? What financial mechanism was used?
39. The War for Resources. Please discuss the strategies being followed by the western countries and China in pursuit of required resource inputs. What issues will determine the likely path of commodity prices? What different form of payment is China using in some developing countries? What are the advantages of that method for each party? Why is China willing to pay substantially more, at times, than the Western firms have in the past?