Aid, Debt And Economic Development

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  • 1/35 Questions

    When countries receive aid for very long periods of time, it may lead to a culture of aid:

    • Giving
    • Dependency
    • Corruption
    • Collusion
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About This Quiz

Explore the dynamics of foreign aid, debt, and economic development in this quiz. Understand the role of ODA, unofficial aid, and humanitarian grants. Learn about the OECD's criteria for aid and enhance your knowledge on global economic cooperation.

Economic Development Quizzes & Trivia

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  • 2. 

    What are three forms of humanitarian or grant aid? 

    • Food Aid

    • Medical Aid

    • Emergency Aid

    • All of the above options

    Correct Answer
    A. All of the above options
    Explanation
    The correct answer is "All of the above options." This means that all three forms of humanitarian or grant aid, which are food aid, medical aid, and emergency aid, are included in the answer.

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  • 3. 

    As part of the HIPC initiative developing countries wanting assistance must develop a ________ Reduction Strategy Paper.    (Hint: The missing words begins with P)

    Correct Answer
    Poverty
    Explanation
    As part of the HIPC initiative, developing countries wanting assistance must develop a Poverty Reduction Strategy Paper. This paper outlines the country's plan to address and reduce poverty within its borders. It is a crucial step in accessing financial assistance and support from international organizations and donors. By developing this strategy, countries can demonstrate their commitment to addressing poverty and improving the well-being of their citizens.

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  • 4. 

    As many developing countries defaulted on their loan repayments in the 1980s, the situation became know as the Third World _________ Crisis 

    Correct Answer
    debt
    Debt
    Explanation
    During the 1980s, several developing countries were unable to repay their loans, leading to a crisis known as the Third World debt crisis. This crisis was characterized by the inability of these countries to meet their financial obligations, resulting in significant economic challenges. The term "debt" refers to the financial burden that these countries faced, highlighting the key issue of loan repayment difficulties. Therefore, the correct answer for this question is "debt."

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  • 5. 

    In absolute dollar terms, which country is the largest donor in the world? 

    • United States

    • Russia

    • Norway

    • United Kingdom.

    Correct Answer
    A. United States
    Explanation
    The United States is the largest donor in the world in absolute dollar terms. This means that the United States contributes the highest amount of money compared to any other country. This could be due to various factors such as the size of the US economy and its role as a global superpower. The US government and private organizations in the country contribute significant amounts of aid and assistance to various causes and countries around the world.

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  • 6. 

    What does the C stand for in UNICEF?

    Correct Answer
    Children
    Children's
    Explanation
    The C in UNICEF stands for "Children" or "Children's". UNICEF is an international organization that focuses on providing assistance and support to children in need around the world. The organization works towards ensuring the rights and well-being of children, including access to healthcare, education, and protection from violence and exploitation. The inclusion of "Children's" in the answer suggests that UNICEF also aims to empower children and involve them in decision-making processes that affect their lives.

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  • 7. 

    NGOs focus on improving the human ___________ of poor people.   (Hint: the word begins with C)

    Correct Answer
    capital
    Explanation
    NGOs focus on improving the human capital of poor people. Human capital refers to the skills, knowledge, and abilities that individuals possess, which can be developed and utilized to improve their economic and social well-being. By investing in education, healthcare, and skill-building programs, NGOs aim to enhance the human capital of impoverished individuals, enabling them to break the cycle of poverty and lead more fulfilling lives.

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  • 8. 

    The OECD is an abbreviation for 

    • Organization for Economic Country Development

    • Organization for Economic Corporate Development

    • Overseas Economic Cooperation & Development

    • Organization for Economic Cooperation and Development

    Correct Answer
    A. Organization for Economic Cooperation and Development
    Explanation
    The correct answer is "Organization for Economic Cooperation and Development." The OECD is an international organization that aims to promote economic growth and improve the living standards of people in member countries. It provides a platform for member countries to discuss and coordinate policies, share information and best practices, and conduct research on a wide range of economic and social issues. The organization focuses on areas such as education, health, environment, trade, and investment, and plays a crucial role in shaping global economic policies and initiatives.

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  • 9. 

    In 1970 the United Nations adopted a resolution agreeing that developed countries would aim to spend _____ % of their national incomes on ODA.

    Correct Answer
    0.7
    .7
    Explanation
    The correct answer is 0.7. In 1970, the United Nations adopted a resolution that developed countries should aim to spend 0.7% of their national incomes on ODA (Official Development Assistance). This resolution was a commitment to support the development efforts of less developed countries and help alleviate poverty and promote sustainable development. The 0.7% target has since been widely recognized and endorsed by various international organizations and governments as a benchmark for aid contributions.

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  • 10. 

    What percentage of the US federal budget is spent on foreign aid?It is less than _________% 

    Correct Answer
    1
    one
    Explanation
    The correct answer is 1%. This means that less than 1% of the US federal budget is spent on foreign aid.

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  • 11. 

    Which of the following countries, do not meet the UN target for ODA?

    • United Kingdom, Germany

    • Norway, Denmark, Sweden

    • Australia, United States, Canada

    • United Kingdom and Norway

    Correct Answer
    A. Australia, United States, Canada
    Explanation
    Australia, United States, and Canada do not meet the UN target for ODA. This means that these countries do not allocate the recommended percentage of their Gross National Income (GNI) towards Official Development Assistance (ODA). ODA is financial assistance provided by developed countries to support the economic development and welfare of developing countries. The fact that these countries are not meeting the UN target suggests that they may not be providing enough aid to support global development efforts.

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  • 12. 

    Which of the following is not an example of multilateral aid?

    • Aid given by the International Monetary Fund

    • Aid given by the World Bank

    • Aid given by the US Aid Agency

    • Aid given by UNICEF

    Correct Answer
    A. Aid given by the US Aid Agency
    Explanation
    The US Aid Agency is not an example of multilateral aid because it is an agency of the United States government and provides aid directly from the US to other countries. Multilateral aid refers to assistance provided by international organizations or groups of countries, such as the International Monetary Fund, the World Bank, and UNICEF, which involve multiple countries working together to provide aid to recipient countries.

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  • 13. 

    In order to assist developing countries in the 1980s, the IMF lent money based on a number of conditions.    These conditions were part of SAPs.   SAPs were:

    • State Action Plans

    • Structural Adjustment Procedures

    • Structural Action Policies

    • Structural Adjustment Policies

    Correct Answer
    A. Structural Adjustment Policies
    Explanation
    In the 1980s, the IMF provided financial assistance to developing countries, but with certain conditions attached. These conditions were known as Structural Adjustment Policies (SAPs). SAPs aimed to promote economic stability and growth in these countries by implementing various policy reforms, such as fiscal austerity, trade liberalization, and privatization. These policies were intended to address economic imbalances and promote long-term development.

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  • 14. 

    In 2016, how may countries reached the UN target for ODA giving when expressed as a percentage of national income? 

    • More than 10

    • 6 countries

    • No countries meet the UN ODA requirements.

    • 8 countries

    Correct Answer
    A. 6 countries
    Explanation
    The correct answer is 6 countries. This means that out of all the countries in the world, only 6 were able to meet the UN target for ODA giving when expressed as a percentage of national income in 2016.

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  • 15. 

    When receiving tied aid, a developing country cannot look to buy the least expensive goods and services, but instead it must buy the more ______________ goods from the donor country.

    • Cheaper

    • Practical

    • Luxurious

    • Expensive

    Correct Answer
    A. Expensive
    Explanation
    When a developing country receives tied aid, it is obligated to purchase goods and services from the donor country. In this scenario, the country cannot opt for the least expensive options, but rather it must purchase the more expensive goods from the donor country. This is because tied aid is often accompanied by conditions or requirements that restrict the purchasing choices of the recipient country. Therefore, in order to fulfill these conditions, the developing country is compelled to buy the more expensive goods and services.

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  • 16. 

    What is the purpose of technical assistance? 

    • To raise the level of technology in the country

    • To raise the quality of human capital by spending more on training.

    • To raise the level of productivity in a country

    • All of the above options.

    Correct Answer
    A. All of the above options.
    Explanation
    Technical assistance serves multiple purposes, including raising the level of technology in a country by providing expertise and guidance, raising the quality of human capital by investing in training and skill development, and ultimately increasing the level of productivity in the country. By encompassing all of these options, technical assistance aims to contribute to overall economic growth and development.

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  • 17. 

    ___________ debt is a legal term used to describe debt that has been incurred by a regime and it is based on spending that did not serve the best interests of the people.  

    • Adverse

    • Unofficial

    • Option 3

    • Odious

    Correct Answer
    A. Odious
    Explanation
    Odious debt is a legal term used to describe debt that has been incurred by a regime and is based on spending that did not serve the best interests of the people. This type of debt is considered illegitimate and should not be the responsibility of the people to repay. It is often used to refer to debt incurred by oppressive or corrupt regimes.

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  • 18. 

    In the past Japan has increased aid to small developing countries, that have provided Japan with political support to:

    • End commercial whaling

    • End the ban on commercial whaling

    • Continue tuna fishing

    • Ban nuclear testing.

    Correct Answer
    A. End the ban on commercial whaling
    Explanation
    Japan has increased aid to small developing countries in order to gain their political support to end the ban on commercial whaling. This suggests that Japan is using its aid as a means to influence these countries to support its position on commercial whaling.

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  • 19. 

    Official Development Assistance (ODA) is:

    • Provided by a government.

    • Provided by a official government agency.

    • Characterized by development objectives.

    • All of the above options are correct.

    Correct Answer
    A. All of the above options are correct.
    Explanation
    The correct answer is "All of the above options are correct." This means that Official Development Assistance (ODA) is provided by a government, provided by an official government agency, and characterized by development objectives. In other words, ODA can be provided by any government, through any official government agency, and its main purpose is to support development initiatives.

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  • 20. 

    According to the OECD, Official Development Assistance must be:

    • Concessional in character and contain a grant element of at least 10%

    • Concessional in character and contain a grant element of at least 25%

    • Concessional in character and contain a grant element of 7%

    • Concessional in character and contain a grant element of 50%

    Correct Answer
    A. Concessional in character and contain a grant element of at least 25%
    Explanation
    The correct answer is "Concessional in character and contain a grant element of at least 25%". This means that Official Development Assistance (ODA) must have favorable terms, such as low interest rates and long repayment periods, and at least 25% of the assistance provided must be in the form of grants that do not need to be repaid. This ensures that ODA is provided on generous terms and is primarily aimed at promoting development rather than generating financial returns.

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  • 21. 

    What happened in 1979?

    • There was a worldwide recession caused at least partly by a significant increase in oil prices.

    • Major economies experienced an economic boom with high commodity prices.

    • There was a worldwide recession caused by an increase in interest rates in developed countries.

    • There was a worldwide recession caused by the collapse of major banks in key markets.

    Correct Answer
    A. There was a worldwide recession caused at least partly by a significant increase in oil prices.
    Explanation
    In 1979, there was a worldwide recession caused at least partly by a significant increase in oil prices. This increase in oil prices had a negative impact on the global economy, leading to a slowdown in economic growth and increased inflation. The higher cost of oil affected various sectors, such as transportation and manufacturing, leading to job losses and reduced consumer spending. Additionally, the oil crisis of 1979 was also influenced by political events, such as the Iranian Revolution, which disrupted oil production and further contributed to the recession.

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  • 22. 

    In 1996, the the IMF and the World bank launched the HIPC initiative.  HIPC stands for:

    • Heavily Indebted Poor Countries

    • Heavy industrialization of Poor Countries

    • Heavily Indebted Program Conditions

    • Heavily Indebted Program Conditionality.

    Correct Answer
    A. Heavily Indebted Poor Countries
    Explanation
    The correct answer is "Heavily Indebted Poor Countries." The HIPC initiative was launched in 1996 by the IMF and the World Bank to address the issue of heavily indebted poor countries. The initiative aimed to provide debt relief and support to these countries, allowing them to reduce their debt burdens and allocate more resources towards poverty reduction and sustainable development.

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  • 23. 

    Some economists have argued that tied aid is politically motivated and is no more than a ________ to industries in the developed country. 

    • Tax

    • Subsidy

    • Giveaway

    • Handout

    Correct Answer
    A. Subsidy
    Explanation
    The correct answer is subsidy. Tied aid refers to foreign aid that is given on the condition that the recipient country uses the funds to purchase goods or services from the donor country. Some economists argue that tied aid is politically motivated and serves as a subsidy to industries in the developed country, as it guarantees a market for their products.

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  • 24. 

    Which of the following is an example of unofficial aid? 

    • Money provided by US Aid Agency through bilateral agreements

    • Money provided by Aus Aid.

    • Money provided to a country by an NGO like World Vision

    • None of the above options are correct.

    Correct Answer
    A. Money provided to a country by an NGO like World Vision
    Explanation
    An example of unofficial aid is money provided to a country by an NGO like World Vision. Unofficial aid refers to assistance given to a country by non-governmental organizations or other non-state actors. These organizations operate independently from government agencies and provide aid in the form of financial resources, goods, or services to countries in need. In this case, World Vision, an NGO, provides money to a country as a form of aid, which falls under the category of unofficial aid.

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  • 25. 

    Which of the following countries is the most generous with ODA, when expressed as percentage of national income?

    • United Kingdom

    • Finland

    • Germany

    • Norway

    Correct Answer
    A. Norway
    Explanation
    Norway is the most generous with ODA when expressed as a percentage of national income. This means that Norway provides a higher proportion of its national income as Official Development Assistance compared to the other countries listed.

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  • 26. 

    What is tied aid?

    • The recipient country must do exactly what the donor country wants.

    • The recipient country must buy good & services from the donor country.

    • The recipient country must implement a range of economic reforms to the receive assistance.

    • All of the above options.

    Correct Answer
    A. The recipient country must buy good & services from the donor country.
    Explanation
    Tied aid refers to a form of foreign assistance where the recipient country is obligated to purchase goods and services from the donor country. This conditionality ensures that the donor country benefits economically from the aid provided. The recipient country is restricted in its choices and must comply with the donor country's preferences, which can limit its ability to make independent decisions regarding its own development priorities.

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  • 27. 

    In the early 1970s commercial banks in western countries increased their loans to developing countries because: 

    • They were compelled to do so by legislation in many countries.

    • They had excess funds to lend out, due to the large deposits of money from OPEC countries.

    • They had excess funds to lend out, due to the large deposits of petro dollars from United States

    • They had excess funds to lend out due to the economic boom of the early 1970s.

    Correct Answer
    A. They had excess funds to lend out, due to the large deposits of money from OPEC countries.
    Explanation
    Commercial banks in western countries increased their loans to developing countries in the early 1970s because they had excess funds to lend out, thanks to the large deposits of money from OPEC countries. The OPEC countries, which were major oil producers, had accumulated significant amounts of money from the oil boom during that time. As a result, these countries deposited their surplus funds in commercial banks in western countries. This influx of deposits provided the banks with a surplus of funds, which they then lent out to developing countries in need of financing for various projects and initiatives.

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  • 28. 

    When developing countries borrowed money from western commercial banks in the early 1970s, what type of interest charges were applied?

    • Soft rates

    • Concessional rates

    • Interest rates based on the ability of the country to pay.

    • Market interest rates.

    Correct Answer
    A. Market interest rates.
    Explanation
    When developing countries borrowed money from western commercial banks in the early 1970s, they were subject to market interest rates. This means that the interest charges applied were based on the prevailing rates in the financial markets, without any special concessions or considerations for the economic conditions or ability of the borrowing country to pay.

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  • 29. 

    The worldwide recession beginning in 1979, was especially difficult for developing countries, because there was a decline in ________________ prices which resulted in less hard ___________ for developing countries.     What two words are missing in the passage?

    • Agricultural & work

    • Oil & cash

    • Commodity & currencies

    • Commodity & technology

    Correct Answer
    A. Commodity & currencies
    Explanation
    During the worldwide recession in 1979, there was a decline in commodity prices, which resulted in less hard currencies for developing countries. This means that the prices of goods such as agricultural products, oil, and other raw materials decreased, leading to a decrease in the value of the currencies of developing countries. As a result, these countries faced greater economic difficulties during the recession.

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  • 30. 

    Due to the SAP programs of the IMF some developing countries experienced ____  development, due to increased rates of malnutrition, declining school attendance and increased infant mortality. 

    • Negative

    • De

    • Adverse

    • Hard

    Correct Answer
    A. De
    Explanation
    The correct answer is "adverse". The sentence states that due to the SAP programs of the IMF, some developing countries experienced adverse development. This implies that the development was negative or harmful, as evidenced by increased rates of malnutrition, declining school attendance, and increased infant mortality.

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  • 31. 

    Foreign aid can be broadly defined as any assistance that is given to a country that would not normally be provided by:

    • Governments

    • Market forces

    • NGOs

    • All of the above.

    Correct Answer
    A. Market forces
    Explanation
    The given correct answer is "market forces." This means that foreign aid is any assistance provided to a country that would not usually be provided by governments, NGOs, or market forces. Market forces refer to the economic factors and mechanisms that determine the supply and demand for goods and services in a market economy. Therefore, foreign aid is assistance that goes beyond what would be naturally provided by market forces.

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  • 32. 

    Which of the following what not one of the IMF's SAPs? 

    • Cuts to basic social services, in order to balance budgets.

    • Increased spending on education to improve human capital.

    • Privatization of nationalized industries .

    • Devaluation on the currency

    Correct Answer
    A. Increased spending on education to improve human capital.
    Explanation
    The correct answer is "Increased spending on education to improve human capital." This answer is not one of the IMF's Structural Adjustment Programs (SAPs) because SAPs typically involve measures such as cuts to basic social services, privatization of nationalized industries, and devaluation of the currency. The IMF's SAPs are aimed at stabilizing and reforming the economies of countries in financial distress, often through austerity measures and market-oriented reforms. Increased spending on education, while beneficial, is not typically a component of these programs.

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  • 33. 

    SAPs might lead to __________ term development but the costs to the  ________ are too high in the short term.   What two words are missing in this sentence? 

    • Short & society

    • Short & poor

    • Long & poor

    • Long & economy

    Correct Answer
    A. Long & poor
    Explanation
    SAPs (Structural Adjustment Programs) are economic policies imposed by international financial institutions on developing countries. These programs often prioritize long-term development goals but can have negative effects on the poor in the short term. The correct answer, "long & poor," reflects this trade-off between long-term development and short-term costs for the poor.

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  • 34. 

    What happened in 1982?

    • Brazil defaulted on its loan payments.

    • Mexico defaulted on its loan payments to western banks.

    • Thailand defaulted on its loan payments to western banks.

    • All of the above options are correct.

    Correct Answer
    A. Mexico defaulted on its loan payments to western banks.
    Explanation
    In 1982, Mexico defaulted on its loan payments to western banks. This means that Mexico was unable to repay the loans it had taken from these banks. Defaulting on loan payments can have significant consequences for a country's economy and financial stability.

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  • 35. 

    What were the disadvantages / costs of SAPs? 

    • Increased unemployment.

    • Fall in real wages.

    • Increased prices for essential products as subsidies were removed.

    • All of the above.

    Correct Answer
    A. Increased unemployment.
    Explanation
    The correct answer is increased unemployment. Structural Adjustment Programs (SAPs) often led to increased unemployment as they involved policies such as privatization and deregulation, which could result in job losses. These programs aimed to promote economic growth and stability, but the removal of subsidies and other measures could also lead to a fall in real wages and increased prices for essential products. However, the specific disadvantage or cost mentioned in the question is increased unemployment.

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  • Mar 18, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 30, 2015
    Quiz Created by
    Phillip27
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