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Introduction to Development Economics
Comparative Economic Development
Classic Theories of Economic Growth and Development
Contemporary models of development and underdevelopment
Poverty, Inequality and Development
100
Countries tend to be classified as more or less developed based on: a. the literacy rate. b. the poverty rate. c. the level of income per capita. d. the types of goods they produce.
Answer: c. the level of income per capita
100
One of the components of the human development index is: a. the percentage of the population who are high school graduates b. the average daily intake of protein c. life expectancy at birth d. the number of doctors per hundred people in the population
Answer: c. life expectancy at birth
100
Which of the following is an assumption of the Lewis two-sector model? (a) surplus labor in the rural sector (b) high unemployment in the urban modern sector (c) rising real urban wages (d) rising marginal product of labor in the rural sector
Answer: a. surplus labor in the rural sector
100
True or false? "The big push is a model of how the presence of market failures can lead to a need for a concerted economy-wide and probably public-policy-led effort"
Answer: true
100
The absolute poverty line (a) decreases as real income grows. (b) shows the average income of the lowest income group. (c) can be measured with the Lorenz curve. (d) none of the above.
Answer: d. none of the above
200
A good definition of the meaning of development is the a. elimination of absolute poverty. b. improvement in the quality of life. c. fulfillment of the potential of individuals. d. all of the above.
Answer: d. all of the above
200
Which measure uses a common set of international prices for all goods and services produced? a. purchasing power parity b. GNI per capita (official exchange rate) c. foreign exchange rate conversions to U.S. dollars d. the exchange rate
Answer: a. purchasing power parity
200
The false paradigm model attributes lack of development to (a) inadequate attention to price incentives. (b) inappropriate advice from rich country economists. (c) low levels of savings and investment. (d) a lack of government regulation.
Answer: b. inappropriate advice from rich country economists
200
The O-ring theory places emphasis on (a) education of the labor force. (b) skill complementarities. (c) purchases of machinery and equipment by firms. (d) none of the above.
Answer: b. skill complementarities
200
The Gini coefficient provides a measure of (a) the level of poverty. (b) the level of relative inequality. (c) disguised unemployment. (d) the rate of growth.
Answer: b. the level of relative inequality
300
Which of the following is not an important objective of development? a. increases in per capita income b. the expansion of available choices c. increases in individual and national self-esteem d. all of the above are important objectives of development
Answer: d. all of the above are important objectives of development
300
The number of units of developing country currency required to purchase a basket of goods and services in a developing country that costs one dollar in the U.S. is given by: a. GNI price deflator. b. Human Development Index ranking. c. purchasing power parity. d. the exchange rate.
Answer: c. purchasing power parity
300
Which of the following is a criticism of the neoclassical counter-revolution school’s approach? (a) markets are not competitive in developing countries. (b) externalities are common in developing countries. (c) inequality may worsen when interventions are removed in developing countries. (d) all of the above.
Answer: d. all of the above
300
What is a coordination failure? a. A concerted, economy-wide, and typically public policy-lef effort to initiate or accelerate economic development across a broad spectrum of new industries and skills. b. Agents inability to coordinate their behaviour/choice/actions leands to an outcome (equilibrium) that leaves all agents worse-off than in an alternative situation that is also an equilibrium c. An economic model in which production functions exhibit strong complementarities among inputs and which has broader implications for impediments to achieving economic development. d. Countries develop to a certain degree but chronically fail to reach high-income status due to lack of innovation capacity
Answer: b. a is a definition of "big push" c is a definition of O-ring model d is a definition of middle-income trap
300
Kuznets’ inverted-U hypothesis (a) implies that things must get worse before they get better. (b) suggests that inequality will worsen and then improve as a country grows. (c) suggests that inequality will improve and then worsen as a country grows. (d) points out six characteristics of modern economic growth.
Answer: b. suggests that inequality will worsen and then improve as a country grows
400
Which of those statements does not correspond to the concept of poverty trap: a. At very low income levels, a vicious circle may set in, whereby low income leads to low investments (in health, education, etc.) which in turns leads to low productivity and economic stagnation. b. For people in the poverty trap zone, income in the future is lower than income today. c. For people outside the poverty trap zone, income in the future is higher than income today. d. Poverty trap is an index measuring national socioeconomic development, based on combining measures of education, health, and adjusted real income per capita.
Answer: d. [this is the definition of Human Development Index]
400
Which of these indicators is not an economic indicator of development: a. GNI per capita b. Economic Growth c. Purchasing Power Parity d. Infant mortality rate
Answer: d. it is a human indicator of development
400
The neoclassical counter-revolution school supports (a) trade restrictions. (b) state-owned enterprises. (c) eliminating government regulations. (d) limitations on foreign investors.
Answer: c. eliminating government regulations
400
True or False? The Big Push model stipulates that market forces alone can get development in place.
Answer: false The big push model stipulates that market forces alone cannot get development in place; hence, there is a need for public coordination of incentives of private agents.
400
Assuming that the Gini coefficient for Egypt is 0.403 and the Gini coefficient for Australia is 0.404, it is possible to conclude that both Egypt and Australia have (a) virtually the same number of households in absolute poverty. (b) virtually the same percentage of households in absolute poverty. (c) virtually the same level of the Human Development Index. (d) none of the above.
Answer: d. none of the above
500
Which of the below statements about the Sustainable Development Goals (SDGs) is false: a. They were launched in 2013 with the imminent expiration of the Human Development Index. b. The SDGs constitute a universal agenda for all countries, developed as well as developing countries and without exceptions. c. The SDGs focus on access to quality education, whereas the Millenium Development Goals (MDG) focused on achieving primary education. d. There are 17 Sustainable Development Goals.
Answer: a. They were launched in 2013 with the imminent expiration of the Millenium Development Goals (MDGs)
500
Which one of these is not one of the main components of the Human Development Index? a. Life expectancy b. Education c. Income d. Prevalence of illnesses
Answer: d. prevalence of illness
500
The supply curve of labor to industry in the Lewis model is horizontal if there is surplus labor in agriculture. This condition persists as long as (a) the marginal product of labor is less than the average product of labor in agriculture. (b) the marginal product of labor in agriculture is less than the marginal product of labor in industry. (c) there are diminishing returns to labor in agriculture. (d) the marginal product of labor in agriculture is zero.
Answer: d. the marginal product of labor in agriculture is zero
500
The Hausman-Rodrik-Velasco (HRV) Growth diagnostic framework stipulates that it is important to carefully identify locally binding constraints on development. What is a binding constraint? a. The situation of being unable or only barely able to meet the subsistence essentials of food, clothing, shelter, and basic health care. b. A situation in which the inability of agents to coordinate their behavior (choices) leads to an outcome (equilibrium) that leaves all agents worse off than in an alternative situation that is also an equilibrium. c. The one limiting factor that if relaxed would be the item that accelerates growth (or that allows a larger amount of some other targeted outcome).
Answer: c a is the definition of absolute poverty b is the definition of coordination failure
500
The poverty gap is the: (a) absolute number of people below the international poverty line. (b) percentage of the population below the international poverty line. (c) consumption (measured in dollars) necessary to bring everyone below the poverty line up to the line. (d) percentage of a country’s total consumption necessary to bring everyone in the country below the poverty line up to the line.
Answer: d. percentage of a country's total consumption necessary to bring everyone in the country below the poverty line up to the line