Chapter 18 Assessment

Chapter Summary

A summary of major ideas in Chapter 18 appears below. See also the Guide to the Essentials of Economics, which provides additional review and test practice of key concepts in Chapter 18.

• Section 1 Levels of Development (pp. 471–476)

  Nations throughout the world exhibit varying levels of economic success. The most prosperous are called developed nations. Nations with relatively low standards of living are called less developed countries. Per capita gross domestic product is the primary measure of development.

• Section 2 Issues in Development (pp. 478–483)

  Less developed countries face a wide range of issues. A high population growth rate, lack of natural resources, inadequate human and physical capital, political instability and corruption, and foreign debt often inhibit development.

• Section 3 Financing Development (pp. 485–488)

  Less developed countries turn to many sources to finance their development, including internal financing, foreign investment, and foreign aid and loans. Help also comes in the form of policy advice and technical assistance.

• Section 4 Transitions to Free Enterprise (pp. 489–494)

  Some communist and former communist nations, such as China and Russia, are making transitions to free enterprise in order to boost their lagging economies. The move to free enterprise requires privatization of industry and changes in the legal system.

Key Terms

Complete each sentence by choosing the correct answer from the list of terms below. You will not use all of the terms.

• malnutrition
• infrastructure
• industrialization
• literacy rate
• internal financing
• debt rescheduling
• light industry
• work ethic
• foreign direct investment
• life expectancy

1. Measuring a nation's _____ provides data on how many people in that country can read or write.
2. _____ may cause disease in adults, and may cause infants to be born with brain damage or birth defects.
3. The production of small consumer goods is referred to as _____.
4. _____ is the establishment of an enterprise in a country by a foreigner.
5. The services and facilities necessary for an economy to function are called _____.
6. A country undergoing _____ is allowed more time to pay off its loans and have a portion of its loans forgiven.
7. _____ is the extensive organization of an economy for the purpose of manufacture.
8. Economists use the term _____ to describe investment derived from the savings of a country's citizens.

Using Graphic Organizers

9. On a separate sheet of paper, copy the tree map below. Chart financing options for less developed countries by filling in each box with an example and description of a financing option.

   

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