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Practice mode Balance of Payments, Aid and Foreign Investment

What is bilateral aid?

Correct answer D. Aid given directly by one country to another

Explanation

Bilateral aid flows directly from a donor government to a recipient country, unlike multilateral aid, which is channelled through bodies such as the World Bank.

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Question 01 Balance of Payments, Aid and Foreign Investment

Which of the following is commonly cited as a benefit that MNCs can bring to a developing country?

Correct answer B. Helping to finance a savings gap or balance of payments deficit

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Question 02 Balance of Payments, Aid and Foreign Investment

Critics argue that MNCs harm developing countries because they: I. increase technological dependence on foreign sources; II. hamper local entrepreneurship and infant industries; III. raise unemployment through unsuitable technology; IV. restrict subsidiary exports that undercut the parent. Which are cited?

Correct answer C. All of I, II, III and IV

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Question 03 Balance of Payments, Aid and Foreign Investment

How do Carmen Reinhart and Kenneth Rogoff explain the paradox of capital flowing from poor to rich countries?

Correct answer C. The role of political and credit-market risk in many LDCs

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Question 04 Balance of Payments, Aid and Foreign Investment

Why did real US food aid, along with food reserves, fall between the 1960s and the 1980s?

Correct answer C. U.S farm interests wanted to reduce surplus grain stocks

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