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Resource Abundance and the Resource Curse

Description: This quiz assesses your understanding of the concept of resource abundance and the resource curse, which is the paradox that countries with an abundance of natural resources often experience slower economic growth and development compared to countries with fewer resources.
Number of Questions: 15
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Tags: resource abundance resource curse economic growth development
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What is the term used to describe the paradox that countries with an abundance of natural resources often experience slower economic growth and development compared to countries with fewer resources?

  1. Resource abundance paradox

  2. Resource curse

  3. Natural resource trap

  4. Dutch disease


Correct Option: B
Explanation:

The term \"resource curse\" is used to describe the paradox that countries with an abundance of natural resources often experience slower economic growth and development compared to countries with fewer resources.

Which of the following is NOT a potential cause of the resource curse?

  1. Overreliance on resource exports

  2. Lack of diversification in the economy

  3. Political instability

  4. High levels of corruption


Correct Option:
Explanation:

High levels of education is not a potential cause of the resource curse. Overreliance on resource exports, lack of diversification in the economy, political instability, and high levels of corruption are all potential causes of the resource curse.

What is the term used to describe the phenomenon where a sudden increase in resource revenues leads to an appreciation of the country's currency, making its exports more expensive and imports cheaper?

  1. Dutch disease

  2. Resource windfall

  3. Natural resource boom

  4. Commodity price shock


Correct Option: A
Explanation:

Dutch disease is the term used to describe the phenomenon where a sudden increase in resource revenues leads to an appreciation of the country's currency, making its exports more expensive and imports cheaper.

Which of the following is NOT a potential consequence of the resource curse?

  1. Environmental degradation

  2. Social inequality

  3. Political instability

  4. Economic diversification


Correct Option: D
Explanation:

Economic diversification is not a potential consequence of the resource curse. Environmental degradation, social inequality, and political instability are all potential consequences of the resource curse.

What is the term used to describe the phenomenon where a country's dependence on resource exports leads to a decline in the competitiveness of its other industries?

  1. De-industrialization

  2. Resource dependence

  3. Natural resource trap

  4. Dutch disease


Correct Option: A
Explanation:

De-industrialization is the term used to describe the phenomenon where a country's dependence on resource exports leads to a decline in the competitiveness of its other industries.

Which of the following is NOT a potential solution to the resource curse?

  1. Diversification of the economy

  2. Investment in education and healthcare

  3. Strengthening institutions and governance

  4. Reducing corruption


Correct Option:
Explanation:

Increasing resource extraction is not a potential solution to the resource curse. Diversification of the economy, investment in education and healthcare, strengthening institutions and governance, and reducing corruption are all potential solutions to the resource curse.

What is the term used to describe the phenomenon where a country's resource wealth is used to finance government spending rather than investment in productive sectors of the economy?

  1. Resource rent

  2. Resource windfall

  3. Natural resource boom

  4. Resource curse


Correct Option: A
Explanation:

Resource rent is the term used to describe the phenomenon where a country's resource wealth is used to finance government spending rather than investment in productive sectors of the economy.

Which of the following is NOT a potential benefit of resource abundance?

  1. Increased government revenue

  2. Job creation

  3. Improved infrastructure

  4. Environmental degradation


Correct Option: D
Explanation:

Environmental degradation is not a potential benefit of resource abundance. Increased government revenue, job creation, and improved infrastructure are all potential benefits of resource abundance.

What is the term used to describe the phenomenon where a country's resource wealth is used to finance social welfare programs rather than investment in productive sectors of the economy?

  1. Resource rent

  2. Resource windfall

  3. Natural resource boom

  4. Dutch disease


Correct Option: A
Explanation:

Resource rent is the term used to describe the phenomenon where a country's resource wealth is used to finance social welfare programs rather than investment in productive sectors of the economy.

Which of the following is NOT a potential consequence of Dutch disease?

  1. Loss of competitiveness in other industries

  2. Increased imports

  3. Appreciation of the currency

  4. Diversification of the economy


Correct Option: D
Explanation:

Diversification of the economy is not a potential consequence of Dutch disease. Loss of competitiveness in other industries, increased imports, and appreciation of the currency are all potential consequences of Dutch disease.

What is the term used to describe the phenomenon where a country's resource wealth is used to finance military spending rather than investment in productive sectors of the economy?

  1. Resource rent

  2. Resource windfall

  3. Natural resource boom

  4. Military-industrial complex


Correct Option: D
Explanation:

Military-industrial complex is the term used to describe the phenomenon where a country's resource wealth is used to finance military spending rather than investment in productive sectors of the economy.

Which of the following is NOT a potential solution to Dutch disease?

  1. Diversification of the economy

  2. Investment in education and healthcare

  3. Strengthening institutions and governance

  4. Devaluation of the currency


Correct Option:
Explanation:

Increasing resource extraction is not a potential solution to Dutch disease. Diversification of the economy, investment in education and healthcare, strengthening institutions and governance, and devaluation of the currency are all potential solutions to Dutch disease.

What is the term used to describe the phenomenon where a country's resource wealth is used to finance corruption and rent-seeking activities rather than investment in productive sectors of the economy?

  1. Resource rent

  2. Resource windfall

  3. Natural resource boom

  4. Kleptocracy


Correct Option: D
Explanation:

Kleptocracy is the term used to describe the phenomenon where a country's resource wealth is used to finance corruption and rent-seeking activities rather than investment in productive sectors of the economy.

Which of the following is NOT a potential benefit of resource abundance?

  1. Increased government revenue

  2. Job creation

  3. Improved infrastructure

  4. Reduced poverty


Correct Option: D
Explanation:

Reduced poverty is not a potential benefit of resource abundance. Increased government revenue, job creation, and improved infrastructure are all potential benefits of resource abundance.

What is the term used to describe the phenomenon where a country's resource wealth is used to finance unsustainable development projects rather than investment in productive sectors of the economy?

  1. Resource rent

  2. Resource windfall

  3. Natural resource boom

  4. White elephant project


Correct Option: D
Explanation:

White elephant project is the term used to describe the phenomenon where a country's resource wealth is used to finance unsustainable development projects rather than investment in productive sectors of the economy.

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