Faculty of Commerce Third grade

English Section Dr. Nanis Fekry

Economics of Development and Planning

Tutorial one
 Determine which of the following sentences are true and which are false:
1. Economic Growth is a normative concept, one not captured by any single measure or
index.
2. Purchasing Power Parity exchange rates are determined largely by the flow of traded
goods and do not reflect the relative prices of nontraded goods.
3. The widely cited indicators of economic growth are: Human Development Index and
Millennium Development Goals.
4. Calculating compound growth rates using regression analysis is potentially misleading
if either the start or end year observation is unusually high or low.
5. In the economic growth models economic growth depends on two basic processes,
factor accumulation and productivity growth.
6. For the capital stock to grow, the value of new investment must be smaller than the
amount of depreciation of existing capital.
7. Sustained economic development can occur without economic growth.
8. Capital accumulation is the main source of growth for developing countries.
9. The difference between 1% growth and 2% growth is 1%.
10. The more widely used measure of national income is GNP because it is easier to track
economic activity within a nation’s borders.
11. Comparisons of per capita income levels using market exchange rate conversions can
be misleading.
12. Economic growth is a necessary and a sufficient condition for improving the living
standards of large numbers of people in low-income countries.

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13. In the economic growth models sustaining economic growth requires generating new
investment only.
14. In the growth models, the key to increasing investment (and the capital stock) is to
increase saving.
15. Solow’s residual is a combination of errors in the data, omission of other factors that
should be included in the growth equation, and efficiency gains and changes in
technology and it is referred to as a “measure of our ignorance” about the growth
process.
16. The terms Economic Growth and Economic Development are sometimes used
interchangeably, but they are fundamentally different.
17. The World Bank refined a rich–poor dichotomy, based simply on income levels which
yield to a three-part classification.
18. As technology improves, the efficiency and productivity of labor increases because
the same amount of labor can now produce more output.
19. The UNDP argues that a geometric mean better reflects fundamental differences
across the indices than did the arithmetic mean.
20. The mobilization of capital is a major concern of policy makers in developing
countries as they have lower levels of capital per worker than the industrialized
countries.

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