Practice Test Answers

6 verified answers

Why do developing countries usually have less variety in their economic activities?

Developing countries are usually small and have limited populations and resources.

People prefer the lifestyle that accompanies traditional activities such as farming.

Focusing on one or two economic activities leads to more rapid economic development.

Limited access to education means that people are not trained to work in industry or technology.

What is a benefit associated with free trade?

higher inflation due to import competition

increased government revenue from tariffs

enhanced innovation and technology

limited market access for domestic industries

An economic incentive is best described as something that

pushes producers or consumers to act on the government's behalf.

motivates producers or consumers to take action.

forces producers or consumers to act in a certain way.

benefits producers or consumers when taking action.

Which best describes the effect negative incentives have on a certain course of action?

They make the action less likely.

They make the action impossible.

They make the action less profitable.

They make the action difficult.

How did NAFTA affect the economies of participating countries?

by increasing the overall volume of production

by creating a balance of exports and imports

by creating unrestricted trade benefits

by raising employment rates and standards of living

Why does an increase in literacy rates often accompany an increase in per capita income?

Developed countries often attempt to raise low literacy rates to improve income.

Developing countries have higher-than-average literacy rates, which typically leads to higher income.

People who can read and who receive an education are eligible for higher-paying jobs.

People who have higher-paying jobs often have the time available to develop literacy skills.

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