Banking
How does a lack of access to formal banking and credit facilities primarily act as a barrier to economic development?
A. It forces the government to increase interest rates to encourage domestic savings.
B. It prevents the poor from accumulating capital and managing financial risks, increasing their vulnerability.
C. It leads to an over-reliance on foreign direct investment (FDI) to fund local infrastructure.
D. It causes a decrease in the velocity of money within the informal sector.
B. It prevents the poor from accumulating capital and managing financial risks, increasing their vulnerability.
What is microcredit?:
A) Government subsidy towards domestic producers
B) Provision of small consumer loans provided by banks at a high interest rate
C) Provision of small-scale loans to low-income individuals or households in LEDCs
D) Government revenue used as international grant for foreign countries
C) Provision of small-scale loans to low-income individuals or households in LEDCs
1. According to the UN High-Level Panel, what are the three specific actions recommended to handle the burden of unpaid work and care?
A) Ignore, outsource, and automate.
B) Recognize, reduce, and redistribute.
C) Tax, regulate, and subsidize.
D) Privatize, monetize, and digitize.
B) Recognize, reduce, and redistribute.
What is digital government?
a) Printing paper forms for citizens
b) Moving government services online to make them less corrupt
c) Hiring more government workers
d) Building new government offices
b) Moving government services online to make them less corrupt
Which of the following is the best example of an institutional change that clearly defines private property rights?
A) A government increases the tax rate on corporate profits.
B) A government passes a law that requires land to be formally surveyed, registered, and titles issued to owners.
C) A central bank lowers interest rates to stimulate investment.
D) A government provides a subsidy to farmers for purchasing new equipment.
B) A government passes a law that requires land to be formally surveyed, registered, and titles issued to owners.
Which of the following best describes the primary goal of 'financial inclusion'?
A. Providing individuals and businesses with access to useful and affordable financial products and services.
B. Ensuring all citizens have equal wealth and income levels.
C. Protecting commercial banks from losses incurred by high-risk borrowers.
D. The mandatory transition of all physical currency into digital cryptocurrency.
A. Providing individuals and businesses with access to useful and affordable financial products and services.
Why is microcredit needed?:
A) Low-income individuals may not be able to provide assets/credit history/collateral to secure loans from commercial banks
B) Government regulations forbid commercial banks from lending to low-income individuals/households
C) Low-income individuals tend to be employed in physical labour
D) The interest rates set by the central bank are too low for commercial banks to make a profit
A) Low-income individuals may not be able to provide assets/credit history/collateral to secure loans from commercial banks
Which "Driver of Change" specifically recommends that businesses set procurement targets to buy from women-owned enterprises?
A) Driver 2: Ensuring legal protection.
B) Driver 4: Building assets.
C) Driver 5: Changing business culture and practice.
D) Driver 7: Strengthening visibility and collective voice.
C) Driver 5: Changing business culture and practice.
What is an anti-corruption watchdog?
a) A police unit that arrests corrupt officials
b) An agency that checks how the government spends money and finds missing funds
c) A website that reports corruption news
d) A group that trains government workers
b) An agency that checks how the government spends money and finds missing funds
According to the theories of New Institutional Economics, poorly defined or insecure land rights in a developing country are most likely to lead to:
A) an increase in FDIs in large-scale agricultural projects.
B) a decrease in the productivity of land and underinvestment in its improvement.
C) a more equitable distribution of income as land is shared communally.
D) a short-term increase in output as farmers maximize immediate extraction.
B) a decrease in the productivity of land and underinvestment in its improvement.
In the context of economic development, why is a basic bank account often called a 'gateway' service?
A. It allows the government to track all personal spending for tax purposes.
B. It provides a physical location for people to store their valuable physical assets.
C. It establishes a financial history that enables access to more complex services like credit and insurance.
D. It is required by law before a person can apply for a passport or identification.
C. It establishes a financial history that enables access to more complex services like credit and insurance.
Why might microcredit not always lead to a reduction in poverty?:
A) Microcredit only works in developed countries
B) Loans are too big for small businesses to manage
C) Microcredit discourages entrepreneurship
D) High interest rates or high-frequency repayment schedules may force borrowers to redirect revenue towards repayment rather than towards business growth
D) High interest rates or high-frequency repayment schedules may force borrowers to redirect revenue towards repayment rather than towards business growth
In the context of "Building Assets" (Driver 4), what must women be able to shape to ensure they are progressing along the digital inclusion continuum?
A) International trade laws and tariffs.
B) Digital, financial, and property products and policies.
C) Social media algorithms and hardware manufacturing.
D) Global carbon credit markets.
B) Digital, financial, and property products and policies.
What is asset disclosure?
a) Selling government assets
b) Making politicians list all their property publicly
c) Hiding politician salaries
d) Donating politician property to charity
b) Making politicians list all their property publicly
The "tragedy of the commons," where a commonly owned resource is overused and degraded, can be resolved through institutional change. Which of the following changes would not be considered a move towards more clearly defined property rights?
A) Privatisation: Dividing the common land into individually owned plots.
B) Government Regulation: Imposing and enforcing strict quotas on how much each user can use.
C) Communal Property Rights: The user community establishes and enforces its own formal rules for sustainable use.
D) Nationalisation: The government takes full ownership and charges user fees.
B) Government Regulation: Imposing and enforcing strict quotas on how much each user can use.
Which strategy is most effective for increasing banking participation in remote or rural areas where physical bank branches are scarce?
A. Increasing the interest rates charged on small personal loans.
B. Limiting the use of biometric identification to urban residents only.
C. Requiring customers to travel to urban centers for all transactions.
D. Expanding mobile banking and digital payment infrastructure.
D. Expanding mobile banking and digital payment infrastructure.
What is a limitation of microcredit?:
A) Small loan sizes prevent firms from expanding, possibly leading to a lack of small-to-medium enterprises (SMEs)
B) Helps to break the poverty trap
C) Extends financial support and services to individuals in remote/rurals areas
D) Helps to empower women
A) Small loan sizes prevent firms from expanding, possibly leading to a lack of small-to-medium enterprises (SMEs)
How does the text describe the nature of gender inequality in terms of its complexity and origin?
A) It is a simple economic issue caused solely by wage gaps.
B) It is a modern problem found only in developing nations.
C) It is a consequence of the interaction of complex systems and pervasive mental models.
D) It is a temporary side effect of rapid industrialization.
C) It is a consequence of the interaction of complex systems and pervasive mental models.
What is e-procurement?
a) Using paper bids for contracts
b) Using computers to choose contractors for public projects to stop cheating
c) Hiring family members for contracts
d) Giving contracts to the highest bidder
b) Using computers to choose contractors for public projects to stop cheating
Consider an economy transitioning from a centrally planned to a market-based system.
The government privatises state-owned agricultural land but fails to establish an independent judiciary to enforce contracts or resolve land disputes. According to the role of institutions in economic development, this scenario is most likely to result in:
A) A rapid increase in allocative efficiency as market forces immediately take hold.
B) The benefits of privatization being largely realized, as the initial allocation of property is sufficient.
C) High transaction costs and limited gains from trade, inhibiting the development of efficient land markets.
D) Increased equity, as the lack of formal enforcement prevents speculative buying and selling.
C) High transaction costs and limited gains from trade, inhibiting the development of efficient land markets.
According to the UN Human Development Report 2019, which of the following is now classified as a "basic necessity" for human development in low-income countries?
A) Fixed-line broadband access
B) Mobile phone technology
C) Physical proximity to a commercial bank
D) Ownership of a biometric passport
B) Mobile phone technology
What is an advantage of microcredit?:
A) High interest rates, which makes it difficult for small businesses to repay (debt trap)
B) Helps to improve income distribution in LEDCs
C) Misallocation of resources if loans are used for immediate consumption instead of income-generating investments
D) Oversaturation of small businesses
B) Helps to improve income distribution in LEDCs
To promote gender equality in public sector employment (Driver 6), what specific mechanisms are suggested to ensure progress in hiring?
A) Establishing gender targets or quotas.
B) Eliminating all public sector exams.
C) Reducing the size of the government workforce.
D) Moving all public jobs to the informal sector.
A) Establishing gender targets or quotas.
What is a digital land registry?
a) Paper records of land ownership
b) Recording land ownership in a digital database so women get secure titles and fewer bribes
c) Selling government land online
d) Renting land through mobile apps
b) Recording land ownership in a digital database so women get secure titles and fewer bribes
A study of two neighboring regions with similar climates shows that Region X has a long tradition of customary land tenure managed by village elders, while Region Y recently implemented a system of freehold private property titling with a government registry.
An economist applying a nuanced view of institutional change would argue that:
A) Region Y will unequivocally achieve higher levels of investment and productivity because private property is universally superior.
B) The effectiveness of each system depends critically on its legitimacy, enforcement mechanisms, and fit with local social norms.
C) Region X's system is preferable because it avoids the transaction costs associated with formal markets and titles.
D) Neither system will lead to development without significant government intervention.
B) The effectiveness of each system depends critically on its legitimacy, enforcement mechanisms, and fit with local social norms.