ECON0054
Thursday 07/12/2023
Quiz # 9
1. Advocates of foreign aid such as Jeffrey Sachs would argue that cutting aid
flows to Africans can have a catastrophic effect on:
a) The lives of millions whose mortality rates are high due to preventable and
treatable causes, inclusive of undernourishment, lack of safe drinking water,
malaria, tuberculosis, and AIDS.
b) Human suffering due to armed conflicts among different ethnic groups.
c) The extend of hunger due to soil quality degradation leading to exceedingly
low levels of food production.
d) Misallocation of resources away from tertiary education towards primary
school enrolment.
a)
2. Foreign aid sceptics would argue that aid flows to poor countries are ineffective
because:
a) Based on the observation of the “typical” African country, aid has not helped
any African region to eliminate malaria.
b) Aid can be harmful if it eases the political burden of war on recipient
governments in poor countries.
c) Aid is necessary only when “the conditions” of economic development are
present.
d) Aid can be harmful if local conditions in recipient countries perpetuate
ethnolinguistic fractionalization.
b)
3. Qian suggests that the association between foreign aid as proxied by official
development assistance (ODA) and GDP per capita is as follows:
a) Low GDP per capita countries always receive the largest amount of foreign
aid.
b) Low GDP per capita countries that are more populous always receive more
aid.
c) Low GDP per capita and more populous aid recipient countries receive less
aid when compared to “less poor” countries.
d) High GDP per capita countries receive less aid.
c)
4. The strategic concerns on foreign aid flows to recipient countries include:
a) Bilateral aid flows are positively associated with former colonial ties.
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b) Bilateral aid flows are positively associated with the number of votes that
the recipient country has in agreement with the donor at the United Nations
(UN) general assembly.
c) Aid flows from France to Francophone former colonies are higher than
those to Anglo-Saxon former colonies for French cultural propagation.
d) All the above
d)
5. The most relevant policies that the empirical investigation by Burnside and
Dollar (2000) on foreign aid are:
a)
b)
c)
d)
Fiscal policies
Monetary Policies
Trade policies
All the above
d)
6. Burnside and Dollar (2000) argue that black market premium is like:
a)
b)
c)
d)
A tax on exports.
An inflation tax.
A tax on wages.
None of the above.
a)
7. Key to identification in the empirical investigation by Burnside and Dollar (2000)
involves:
a) GDP per capita being in recipient determined by lagged foreign aid flows.
b) GDP growth in OECD countries affecting GDP growth in foreign aid recipient
countries.
c) Pinning down variables that belong to their aid equation but do not affect growth
directly in the recipient countries.
d) None of the above
c)
8. In Burnside and Dollar (2000) OLS growth regressions, highly significant of the
following variables are obtained:
a)
b)
c)
d)
A dummy for Sub – Saharan Africa.
The inflation rates.
The degree of trade openness
All the above
d)
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9. The useful variables for construction of the policy index in the Burnside and
Dollar (2000) article are:
Trade openness
Inflation
Budget surplus
All the above
a)
b)
c)
d)
d)
The main result of the Burnside and Dollar (2000) investigation is that:
10.
a)
b)
c)
d)
Aid interacted with policy is highly significant.
Aid to GDP ratio is highly significant.
Aid interacted with policy is highly significant in their OLS estimations only.
None of the above
a)
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Growth regressions in the Burnside and Dollar (2000) paper review a policy index
relevant to foreign aid:
1. a) Where a country’s budget surplus matter for foreign aid to be
effective.
2. b) Where a country’s low inflation matter for foreign aid to be effective.
3. c) Where a high degree of trade openness matter for foreign aid to be
effective.
4. d) Where a country’s large budget surplus, its low inflation, and its high
degree of
trade openness matter for foreign aid to be most effective.
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