According to Moustafa Bassiouny, the economist interviewed in the clip, what effect do subsidies have on the Egyptian government’s finances?

. Why are some development organizations made up of multiple member-nations?

because development projects are always a massive undertaking

because some of the problems facing the world are too large in scope to be handled by a single country

because it takes a lot of countries to oppose the United States

because the United Nations was the world’s first development organization and it’s made up of nearly 200 member-nations

2. Which of the following statements about purchasing power parity (PPP) is true?

Purchasing power parity is an attempt to compare exchange rates on a country’s black market with official, government-backed exchange rates.

To adjust for purchasing power parity, prices in a country are compared against Spanish pesos.

If we say that someone “lives on less than a dollar a day,” what we mean is that the person lives on an amount of his local currency whose total value is less than a U.S. dollar.

Purchasing power parity means that a steak in Russia will be the exact same price as a steak in Thailand.

3. Generally speaking, which of the following BEST describes the objective of nongovernmental organizations (NGOs)?

to maximize corporate profits

to advance various social causes (education, clean water, political reform, etc.)

to enforce the policies of the government the NGO is hired by

to combat governments in the developed world on behalf of developing countries

4. The World Bank considers a country “developing” if which of the following is true?

The country has little or no industrial diversification.

The country has a low rate of literacy.

The country has a high rate of inflation.

The country has a low- or middle-income economy.

5. Which of the following statements BEST expresses the beliefs of social-conflict theory?

There is a smaller risk of social conflict in North America than in other areas of the world.

The history of the world is the history of the powerful dominating the weak.

The Soviet Union is the world’s model for successful development.

The best way for countries to develop is to follow the model of wealthy developed countries

6. To opponents of lending to poor countries, which of the following is a typical result of providing loans?

The countries taking out the loans are likely to become “addicted” to credit.

The countries taking out the loans are likely to become financially empowered.

The countries taking out the loans are likely to embezzle all of the money.

The countries taking out the loans are likely to improve their economy, but very slowly

7. Which of the following describes “dependency theory”?

the notion that developed nations are obligated to provide for poor nations

the notion that poor nations should become dependent on one another

the notion that developing nations are kept poor because of their reliance on wealthier nations

the notion that international financial institutions are dependent on their member states for legitimacy

8. Countries in need of economic reform are often advised to devalue their currencies. This measure, however, is usually strongly opposed. Why?

Devaluation often leads to dependence on other countries.

Devaluation often makes imports much cheaper.

Devaluation often leads to a cycle of inflation.

Devaluation often increases labor costs.

9. Countries that take on IMF loans typically use the money to do which of the following?

develop new weapons systems

increase their foreign influence

invest in high-risk, high-reward stocks

make up for budget shortages

10. Which of the following actions is likely to fall under the responsibility of the World Bank, as opposed to the International Monetary Fund (IMF)?

helping the Cambodian treasury to avoid default

publishing an analysis of the labor market in the Philippines

financing a dam in Argentina

advising the Liberian government on tax reform

11. Which of the following is the strongest safeguard against civil war?

the presence of multiple strong militias

steady economic growth

strong executive leadership in the government

the dominance of a particular ethnic group

12. Which of the following factors is LEAST likely to increase chances of civil war in a developing country?

a low national income

slow growth, stagnation, or decline in the country’s economy

an economy centered on exporting valuable natural resources

large income inequality among the country’s citizens

13. Which of the following BEST predicts that a country will have a civil war?

The country is repressive.

The country has a large amount of ethnic diversity.

The country has had a civil war within the past ten years.

The culture of the country is based in violence and war is not seen as undesirable

14. During a civil war, which of the following groups typically suffer the most casualties?

peacekeepers

civilians

rebels

government soldiers

15. Why does the presence of valuable natural resources in a developing country often wind up hindering the development of the country’s economy?

Natural resources from poor nations are worth less on the international market.

Complicated tax policies often make the resources too expensive to be worth developing.

The country’s natural resources are targeted by just a few powerful people in the country, who keep the majority of their profits for themselves.

Countries with valuable resources are often forced by multinational corporations to sign predatory deals, leaving the countries with only a pittance.

16. When a country’s government is controlled by a small group of people who also control most of the country’s businesses, the ruling class is likely to do which of the following?

create laws that benefit everyone in the country equally

reduce the size and power of the government

use the power of government to reduce concentrations of wealth

utilize payoffs and contributions in exchange for political favors and vice versa

17. How can developed countries assist developing countries in reforming weak institutions? Choose the BEST answer.

by paying for the campaigns of pro-Western politicians in developing countries

by helping developing countries adopt good government policies

by suing extractive governments at the International Criminal Court

by financing rebel groups that claim to share the philosophy of wealthy countries

18. Which of the following are the actions of an extractive state?

awarding government contracts to the winners of transparent auctions

steering lucrative government contracts to political loyalists

forcing members of Congress to disclose their business ties

ensuring police force compliance with anti-bribe laws

19. Which of the following statements BEST describes the relationship between weak institutions and a country’s distribution of wealth?

In countries with weak institutions, the economy is freer, so anyone is able to get rich whether lower or upper class.

In countries with weak institutions, the majority of wealth usually winds up in the hands of a few elites.

In countries with weak institutions, most of the wealth is extracted out by wealthy nations such as Japan and France.

In countries with weak institutions, there is almost always total anarchy, so nobody has any chance to amass wealth

20. Which of the following is a sign that a country has weak institutions? Choose the BEST answer.

It has frequent political protests.

Rents in its cities are very high.

Its inflation rate is strongly controlled.

Its economy is controlled by the politically connected.

Part 2

1. Why there is so little formal work in Peña Blanca?

It is a resort town that exists mostly to provide seasonal service to tourists.

The town’s political problems have spilled over to its economy.

Town residents prefer to freelance.

It is a poor, rural town whose economy and infrastructure are not strong enough to support regular jobs.

2. What was the goal of the Bretton Woods conference in 1944?

to finance agricultural projects in Latin America

to draft a defense pact against the Soviet Union

to craft a new environmental treaty

to prevent a future economic collapse through international cooperation

3. Approximately what percentage of the world is impoverished?

50 percent

15 percent

25 percent

75 percent

4. When numbers are adjusted for purchasing power parity it means that which of the following is true?

What you can buy for $10 in the U.S. is equivalent to what citizens of another country can buy for $10 U.S. in their country.

Every country in the world uses U.S. dollars in their economies.

A Big Mac in two different countries will cost exactly the same.

15 units of local currency (such as kwachas) are equal to 15 U.S. dollars.

5. What does the term Global South refer to?