Final Economic Development Test Bank.2023

Test Bank
Chapter (1) MCQs

1. 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
2. Which of the following demonstrates international interdependence?
a. The oil shocks
b. The debt crisis
c. Global warming
d. All of the above
3. A subsistence economy is
a. A very low income economy
b. An economy in which people make what they consume
c. An economy in which people receive food for pay
d. All of the above
4. Development economics is the study of the
a. Alleviation of absolute poverty
b. Transformation of institutions
c. Allocation of resources in developing countries
d. All of the above
5. Development economics must have a scope wider than traditional economics because
a. Values and attitudes play little role in the pace of development
b. People in developing societies do less utility-maximizing
c. Transformation of social institutions is necessary for development
d. All of the above
6. 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
7. 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
8. The Millennium Development Goals include
a. Eliminating the proportion of people living on less than $1 per day
b. Universal primary education
c. Increasing exports by one half
d. All of the above
9. The core values of development include
a. Increasing income per person
b. Reducing the inequality of income
c. The ability to meet basic needs
d. All of the above
Page 1 of 25
Chapter (2) MCQs
1. An example of an upper-middle income country is
a. India.
b. Brazil.
c. Indonesia.
d. Nigeria.
2. A newly industrialized country is
a. the same as a high-income country.
b. any country that has experienced sustained growth in industry.
c. a special classification given to some upper-middle income countries that have
achieved relatively advanced manufacturing sectors.
d. any country that has moved out of lower income status.
3. Which of the following is not an upper-middle income country?
a. Brazil
b. South Africa
c. Pakistan
d. Argentina
4. Which of the following is a low-income country?
a. Mexico
b. Thailand
c. Turkey
d. Bangladesh
5. 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.
6. What percent of the world’s nations have at least five significant ethnic populations?
a. 0–10
b. 10–20
c. 20–30
d. 30–40
e. over 40
7. What fraction of developing countries have recently experienced some form of
significant interethnic conflict?
a. less than one-tenth
b. a tenth to one-quarter
c. one quarter to one half
d. over one half
8. Which of the following African countries has experienced widespread death and
destruction due to ethnic or clan based conflict in the previous decade?
a. Rwanda
b. Sudan
c. Somalia
d. all of the above
9. Which measure uses a common set of international prices for all goods and services
produced?
a. purchasing power parity income levels
b. GNI price deflators
c. foreign exchange rate conversions to U.S. dollars
d. the exchange rate
Page 2 of 25
10. 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
11. About how many people lack access to basic sanitation?
a. 20 million
b. 200 million
c. 500 million
d. 1 billion
e. 2 billion
12. About how many people lack access to safe water?
a. 20 million
b. 200 million
c. 500 million
d. 1 billion
e. 2 billion
13. About how many malnourished children under age five are there in the developing world?
a. 20 million
b. 200 million
c. 500 million
d. 1 billion
e. 2 billion
14. Neutral technological progress occurs when
a. higher output levels are achieved with the same quantity and combinations of
factor inputs
b. higher output levels are achieved by more capital intensive methods
c. higher output levels are achieved by more labor intensive methods
d. higher output levels are achieved
15. Conditions of today’s developed countries at the start of their industrialization differ
from conditions in the developing world in that
a. population growth rates were higher
b. more advanced technology was available
c. there were more opportunities for development assistance
d. none of the above
16. Most successful examples of modern economic growth have occurred in a country with
a. a temperate-zone climate
b. a market economy
c. exports of manufactured goods
d. all of the above
17. Which of the following is not an indicator that is used by the World Bank in measuring the
level of economic development?
a. life expectancy at birth
b. adult literacy rate
c. infant mortality rate
d. all of the above are not used by the World Bank
18. The dependency burden is
a. a measure of the degree to which the less developed countries are dependent on
the rich industrial countries
b. the average number of children that a woman gives birth to during her lifetime
c. the number of babies born per 1000 persons
d. the percent of the population that is below 15 and above 65 years of age
Page 3 of 25
19. How many people still live on less than the equivalent of $1.25 per day (new definition of
“extreme poverty”)?
a. 100 million
b. 500 million
c. 1.4 billion
d. 2.2 billion
20. Which of the following is not an indicator that is used to compute the Human
Development Index?
a. life expectancy at birth
b. real GDP per capita
c. infant mortality rate
d. adult literacy rate.
21. The combined GDP of developing countries constitutes approximately
a. 5 percent of global GDP
b. 20 percent of global GDP
c. 30 percent of global GDP.
d. 40 percent of global GDP
22. Developing countries are starting to converge with developed countries in the long run in
what respect?
a. Growth rate
b. Income inequality
c. Population
d. Per capita income
23. Which region in the world has the lowest GNI per capita based on the World Bank Atlas
method?
a. Sub-Saharan Africa
b. East Asia/Pacific
c. South Asia
d. Latin America/The Caribbean
Chapter (3) MCQs

1. Which of the following is not a policy proposal of the neoclassical counter-revolution
school?
a. promoting free trade
b. privatizing state-owned enterprises
c. welcoming multinational corporations
d. promoting trade unions
2. 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
3. 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
4. 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
Page 4 of 25
5. Which of the following approaches does not offer an international dependence
explanation of underdevelopment?
a. the false paradigm model
b. the neoclassical counter-revolution
c. the dualistic development model
d. the neocolonial dependence model
6. The neoclassical counter-revolution school supports
a. trade restrictions
b. state-owned enterprises
c. eliminating government regulations
d. limitations on foreign investors
7. Implicit assumptions from which theories evolve are known as
a. a paradigm
b. biases
c. stylized facts
d. normative economics
8. On which of the following does the neoclassical counter-revolution school most blame
underdevelopment?
a. misguided government policies
b. relatively rigid cultural traditions
c. the legacy of colonialism
d. unfair trade practices on the part of developed countries
9. According to the theory of structural patterns of development, which of the following
tends to occur as a country develops?
a. a shift from agriculture to industry and services
b. an increase in the percentage of income spent on food
c. growth of the rural sector
d. a decline in trade as a share of GNP
10. In the public choice (or new political economy) approach to development the emphasis is
on
a. growth in the rural sector
b. the self-interested behavior of public officials
c. the dependence of LDCs on former colonial powers
d. the inherent efficiency of developing country markets
11. A situation in which government intervention in the economy worsens the economic
outcome is termed
a. neoclassical failure
b. socialism
c. government failure
d. dependency revolution
12. According to the dependence theory, the developing world is known as the
a. backward areas
b. periphery
c. first world
d. center
13. The underlying assumption of the Harrod-Domar growth model is that
a. the incremental capital-output ratio is given by k Y/K.
b. growth is mainly determined by capital accumulation
c. growth can be sustained only if agricultural productivity rises
d. developing countries save too much and invest too little
14. International dependence theories distinguish between two groups of countries known as
a. rich-poor
b. developed-developing
c. center-periphery
d. independent-dependent
Page 5 of 25
15. 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
16. Which of the following is an assumption of the Lewis two-sector model?
a. surplus labor in industry
b. positive marginal product of labor in agriculture
c. an upward sloping labor supply curve in industry
17. The market-friendly approach to development emphasizes
a. self-interested behavior of public officials in LDCs
b. the dependence of LDCs on former colonial powers
c. the inherent efficiency of markets in developing countries
d. that markets in LDCs fail sometimes and selective interventions can promote
economic development
18. The linear stages theory of economic growth fails to recognize that increased investment
is
a. both a necessary and a sufficient condition
b. a necessary but not a sufficient condition
c. a sufficient but not a necessary condition
d. neither a necessary nor a sufficient condition
19. Which of the following are components of economic growth
a. growth in labor force
b. technological progress
c. investment
d. all of the above
Chapter (4) MCQs

1. 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
2. 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
3. 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
4. According to Kuznets, in the process of development inequality in an economy will
normally
a. first rise and then fall
b. first fall and then rise
c. remain about the same
Page 6 of 25
d. show no definite pattern
5. Poverty is better studied with size distribution measures than those based on factor
distribution because
a. labor income may be highly concentrated in well-paid modern sector workers
b. some poor farmers may receive a sizable share of income in rent
c. income from nonmarket activities such as foraging may be important
d. all of the above
6. The number of people in the world who are absolutely poor is closest to
a. a quarter-billion
b. a half-billion
c. one and a half billion
d. two billion
e. four billion
7. With modern sector enrichment growth, inequality will
8. With modern sector enlargement growth, inequality will
d. all of the above
9. Higher income countries tend to have lower levels of absolute poverty because
a. more employment opportunities
b. more public assistance
c. greater entrepreneurship opportunities
d. all of the above
10. One of the characteristics of the poor is that they are
a. more likely to be employed in the modern industrial sector
b. more likely to come from small families
c. more likely to be well educated
d. more likely to live in a rural area
11. Which of the following policies might increase labor intensity in industry?
a. a decline in the cost of credit
b. a decline in the minimum wage rate
c. a decline in the elasticity of substitution
d. all of the above
12. Which of the following policies may decrease the level of capital intensity in industry?
a. an increase in the cost of capital
b. a decrease in the minimum wage
c. an increase in the elasticity of substitution
d. all of the above
13. The Ahluwalia-Chenery welfare index
a. is a method used to measure changes in absolute poverty
b. shows the value judgment implications of using the change in income per capita as a
measure of the change in development
c. is a method used to measure changes in inequality
d. is a method used to measure the growth rate of GDP
14. About what percent of the world’s poorest people are female?
a. 30
b. 50
c. 70
d. 90
Page 7 of 25
15. About how many girls and women are said to be “missing” in LDCs?
a. 2 million
b. 20 million
c. 100 million
d. 2 billion
16. Which of the following groups is(are) more likely to be poor?
a. Minorities
b. indigenous people
c. women
d. all of the above
17. Distribution of income according to percentiles, such as the highest 40% or lowest 20% is
known as the _______________ distribution of income
a. Size
b. Functional
c. GNP-weighted
d. equal-weighted
18. What conclusion can be reached from the following data on income shares?
Percentage of Income Received by
Lowest 40% Highest 20%
Bangladesh 17.3 45.3
Indonesia 14.4 49.4
a. absolute poverty is more widespread in Bangladesh

b. the size distribution of income is more unequal in Indonesia
c. Bangladesh had adopted a strategy of redistribution with growth
d. growth in Bangladesh is calculated using poverty weights rather than income
weights
19. Developing countries who have adopted capital-intensive technologies tend to have
a. relatively higher Gini coefficients
b. relatively lower Gini coefficients
c. Gini coefficients equal to one
d. Gini coefficients equal to zero
20. 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
21. Brazil’s growth rate during the 1960’s was 6.0% when poverty weights were used to
evaluate growth, compared with 8.2% when GNP weights were used to evaluate growth.
One can conclude from these numbers that
a. average income growth was greater for poor households than for rich households
b. average income growth was greater for rich households than for poor households
c. more and more households were falling below the poverty line
d. the size distribution of income was getting worse
22. 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
Page 8 of 25
23. The functional distribution of income refers to the distribution of income between
a. individuals or households
b. rural individuals or households
c. urban individuals or households
d. the factors of production (land, labor and capital).
Chapter (5) MCQs

1. Projections place world population by 2050 at
a. between 4 and 6 billion.
b. between 6 and 8 billion.
c. between 8 and 10 billion.
d. between 10 and 12 billion.
2. Children under the age of 15 represent about __________ percent of the population
of developing countries
a. 25
b. 29
c. 30
d. 61
e. 75
3. Evidence presented in the text suggests that birthrates among developing countries are
lower with
a. higher growth
b. higher inequality
c. higher GNP per capita
d. all of the above
4. The hidden momentum of population growth is caused by
a. the demographic transition.
b. population age structure.
c. the opportunity cost of a woman’s time.
d. children’s contribution to income
5. The world rate of population growth is closest to
a. 1%
b. 2%
c. 3%
d. 4%
6. In stage III of the demographic transition
a. the birth rate and the death rate are relatively low
b. the birth rate and the death rate are relatively high
c. the birth rate is relatively high and the death rate is relatively low
d. the birth rate is relatively low and the death rate is relatively high
7. The Malthusian population trap assumes that
a. contraception is unavailable
b. technological progress may be rapid
c. fertility increases with per capita income
d. all of the above
8. Which of the following would most likely reduce the birthrate?
a. public health improvements
b. an increase in child mortality
c. a decline in the availability of secondary education
d. a reduction in the opportunity cost of a woman’s time
e. all of the above
Page 9 of 25
9. The number of live births per 1000 people in the population per year is the
a. hidden momentum of population growth
b. population growth rate
c. demographic transition
d. crude birth rate
10. Which of the following will cause the largest reduction in the birthrate?
a. the population becomes less religious
b. public healthcare improves
c. education becomes more available
d. an increase in the opportunity cost of a woman’s time
11. In recent years, the fertility rate in developing countries has been
a. Declining
b. holding steady
c. increasing
d. showing no particular pattern
12. Evidence suggests that population growth has negative effects on
a. economic growth
b. poverty reduction
c. environment
d. education
e. all of the above
13. The proportion of the total population aged 0–15 and over 65, is known as the
a. dependency burden
b. unproductive population
c. surplus labor
d. population momentum
14. The rate of natural increase in the population of developing countries is most correlated
with
a. advances in developed country technology
b. increases in developing country income
c. an increase in the fertility rate
d. all of the above
15. Which of the following is a direct implication of the view that childbearing is an economic
decision?
a. People will not have additional children unless they can earn a profit from doing so
b. Social factors have no effect on childbearing decisions
c. Compulsory education will increase fertility because educated children have the
potential to earn higher salaries
d. Fertility should fall with improved opportunities for women to work in jobs outside
the home
16. Which of the following geographic regions is expected to experience the largest
percentage increase in its population between 2003 and 2050?
a. Asia and Oceania
b. Latin America
c. North America
d. Africa
17. At present, approximately how many years would it take for the world’s population to
double?
a. 35
b. 58
c. 96
d. 211
Page 10 of 25
18. The Malthusian population trap model has been criticized on the grounds that it
a. ignores the role of technological progress
b. assumes that population growth is primarily determined by individual choice over
the number
of children to have
c. both (a) and (b) are correct
d. neither (a) nor (b) is correct
19. Approximately how many women were estimated to be “missing” in China?
a. 20-30 million
b. 35-48 million
c. 44-50 million
d. 52-58 million
Chapter (6) MCQs

1. Developing countries have not benefited as much as expected from their higher education
programs because of
a. lack of program focus on the needs of the country
b. increasing returns to scale in each individual’s education
c. graduates get jobs in the private sector
d. all of the above
2. Education of girls is a crucial development investment because
a. it leads to improved child health
b. it leads to reduced fertility
c. women do most of the work in agriculture
d. all of the above
3. It is important to place particular stress on the role of primary education in the
development strategy because of
a. LDC’s comparative advantage from basic skills education.
b. the law of diminishing returns
c. development emphasis on poverty alleviation
d. all of the above
4. Credential inflation results from
a. a combination of cost-push inflation and demand-pull inflation
b. rigidities in the industrial sector
c. the need to select from among qualified applicants in the modern sector
d. all of the above
5. The fact that developed countries have strong, widely attended university systems
indicates that
a. university expansion should be a development priority
b. universities teach skills used on the job
c. developing countries place too much stress on agriculture
6. An individual’s demand for education is most affected by
a. direct and indirect costs of schooling
b. development priorities of the country
c. the desire to escape agricultural work
d. all of the above
7. Concentration of resources on higher rather than basic education in developing countries
tends to lead to
a. greater inequality
b. lower fertility
c. less international migration
Page 11 of 25
d. more job creation
8. The supply of public school places is determined by
a. individuals’ demand for education
b. direct and indirect costs of schooling
c. political processes, often unrelated to economic criteria
d. all of the above
9. Studies show that improved education of women in developing countries leads to
a. lower infant mortality
b. better designed, market based development policies
c. lower international dependence
d. all of the above
10. Human capital is best defined as
a. the amount of wealth people have.
b. the amount of money people have to spend on schooling.
c. human capacities that raise productivity.
d. the average education level of the population.
11. Child labor is a widespread problem that applies primarily to children
a. between the ages of 5 and 14
b. between the ages of 10 and 14
c. between the ages of 12 and 14
d. between the ages of 12 and 16
12. The World Bank approach to combating child labor stresses
a. making child labor legal under certain conditions
b. tackling the sources of poverty
c. encouraging families to migrate to richer countries
d. providing each child with a computer so that children have an alternative to
working
13. The ILO approach to combating child labor stresses
a. encouraging parents to migrate to the cities in search of work
b. banning child labor
c. tackling the sources of poverty
d. all of the above
14. As the number of years of schooling completed increases, the expected private return
and private cost of education
a. increase at roughly the same rate
b. increase at different rates with expected private return increasing at a slower rate
than private cost.
c. increase at different rates with expected private return increasing at a faster rate
than private cost
d. do not increase
15. According to the 2005 UNDP Human Development Report child mortality (under age 5) has
declined in all regions of the world except:
a. South Asia
b. Sub-Saharan Africa
c. Middle East and North Africa
d. None of the above
16. According to the Regional HIV and AIDS Statistics data from WHO, which region of the
world has the largest number of adults and children living with HIV?
a. South and South-East Asia
b. Sub-Saharan Africa
c. Latin America
d. North America
Page 12 of 25
Chapter (7) MCQs
1. A major cause of environmental degradation in developing countries is
a. population growth.
b. rural poverty
c. rapid urbanization
d. all of the above
2. Sustainable development means
a. emphasizing the role of the market
b. emphasizing the role of government
c. meeting the present generation’s needs without compromising the needs of future
generations
d. maintaining output growth at a constant rate
3. Which of the following environmental problems are largely caused by persistent poverty?
a. Deforestation
b. Soil erosion
c. Ground water contamination
d. All of the above
4. Which of the following conditions is violated if there is a free rider problem?
a. Universality
b. Exclusivity
c. Transferability
d. Enforceability
5. A major cause of environmental degradation in developing countries is
a. debt for nature swaps
b. poverty
c. a lack of public transportation
d. land reform
6. The “cost of rainforest preservation” can be lowered for developing countries by
a. the development of alternative rainforest products
b. research on agriculture in rainforest soils
c. encouraging rainforest settlement of the poor
d. subsidies for activities like cattle raising
7. Debt-for-nature swaps are most generally
a. beneficial only to the developing country
b. beneficial only to the developed country
c. beneficial only to the bank which can write off the debt
d. beneficial to all countries
8. A resource that is publicly owned and allocated under a system of unrestricted access is
known as
a. a socialist resource
b. a collective resource
c. a common property resource
d. a transferable resource
9. The portion of a country’s overall assets that is directly related to the environment, such
as forests and soil quality, is known as
a. environmental capital
b. debt for nature swaps
c. protected areas
d. common property assets
10. International resources shared by all countries such as oceans and air are known as
a. global commons
b. free rider problems
c. nonrenewable resources
d. cooperative resources
Page 13 of 25
11. The free rider problem is a situation in which
a. effluents such as CFCs combine with ozone and decrease concentrations of that
protective chemical
b. one agent secures benefits that others pay for.
c. there are excessive subsidies given to polluting buses or other forms of mass transit
d. perfect property rights exist
12. The annual income that can be consumed without diminishing the total capital assets of a
nation is
a. purchasing power parity income.
b. sustainable national income.
c. environmental capital stock.
d. per capita income.
13. An example of a biomass fuel is
a. Coal
b. nuclear fuel
c. manure
d. oil
14. Which of the following conditions does not characterize perfect property rights markets?
a. Universality
b. Exclusivity
c. Sustainability
d. Enforceability
15. In what way do developing countries make the largest contribution to the global
concentrations of greenhouse gases?
a. vehicle emissions
b. deforestation
c. mining
d. irrigation
Page 14 of 25
Important Questions
Brazil’s national income is about $300 billion and Brazil’s population is approximately 200
million. The following income distribution data are for Brazil.
Quintile Percent share
Lowest 10% 1%
First quintile 4%
Second quintile 12%
Third quintile 14%
Fourth quintile 24%
Highest 20% 46%
1. The axes of Lorenz Curve are:

a. Horizontal: 20-40-60-80-100
Vertical: 5-17-31-55-100
b. Horizontal: 6-16-28-52-100
Vertical: 20-40-60-80-100
c. Horizontal: 20-40-60-80-100
Vertical: 4-16-30-54-100
d. None of the previous answer
2. What is the approximate dollar income of the bottom 10%?
a. $3 billion
b. $12 billion
c. $48 billion
d. $138 billion
a. $3 billion
b. $12 billion
c. $48 billion
d. $138 billion
a. $3 billion
b. $12 billion
c. $48 billion
d. $138 billion
5. What is the approximate dollar income of the top 20%?
a. $3 billion
b. $12 billion
c. $48 billion
d. $138 billion
a. $3 billion
b. $12 billion
c. $48 billion
d. $210 billion
7. Kuznets ratio is
a. 9.2
b. 2.875
c. 17.5
Page 15 of 25
8. What is the level of poverty if the poverty line is $500 per capita?
a. 10%
b. 20%
c. 40%
d. 60%
a. 10%
b. 20%
c. 40%
d. 60%
Rwanda’s national income is about $200 billion and Rwanda’s population is approximately 120
million. The following income distribution data are for Rwanda.
Deciles Percent share
First decile 1%
Second decile 2%
Third decile 3%
Fourth decile 6%
Fifth decile 8%
Sixth decile 10%
Seventh decile 12%
Eighth decile 15%
Ninth decile 18%
Highest 10% 25%
10. The axes of Lorenz Curve are:

a. Horizontal: 10-20-30-40-50-60-70-80-90-100
Vertical: 1-2-3-6-8-10-12-15-18-25
b. Horizontal: 1-3-6-12-20-30-42-57-75-100
Vertical: 10-20-30-40-50-60-70-80-90-100
c. Horizontal: 10-20-30-40-50-60-70-80-90-100
Vertical: 1-3-6-12-20-30-42-57-75-100
a. $2 billion
b. $4 billion
c. $6 billion
d. $12 billion
a. $2 billion
b. $4 billion
c. $6 billion
d. $12 billion
a. $6 billion
b. $12 billion
c. $24 billion
d. $48 billion
a. $36 billion
b. $50 billion
c. $86 billion
d. $140 billion
Page 16 of 25
a. $36 billion
b. $50 billion
c. $86 billion
d. $140 billion
16. Kuznets ratio is
a. 3.58
b. 5.72
c. 10.3
a. 10%
b. 20%
c. 30%
d. 40%
a. 10%
b. 20%
c. 30%
d. 40%
Human Development Index ranking
a. True
b. False
20. Externalities are common in developing countries is a criticism of the neoclassical
counter-revolution school’s approach
a. True
b. False
21. Structural-change analysts emphasize both domestic and international constraints on
development
a. True
b. False
22. Countries tend to be classified as more or less developed based on the poverty rate
a. True
b. False
23. The hidden momentum of population growth is caused by the demographic transition.
a. True
b. False
24. Sustainable development means meeting the present generation’s needs with
compromising the needs of future generations
a. True
b. False
25. With traditional sector enrichment growth, inequality will
a. Improve
b. Worsen
c. Improve or worsen
26. Developing countries are starting to converge with developed countries in the long run
respect to population
a. True
b. False
Page 17 of 25
27. Underdevelopment is thus seen as an externally induced phenomenon according to the
neocolonial dependence model
a. True
b. False
28. What the Millennium Development Goals include:
a. Eradicate extreme poverty and hunger
b. Reduce by half the proportion on people who suffer from hungry
c. Ensure that all boys and girls complete a full course of primary schooling
d. All of the above
29. In stage II of the demographic transition
30. Education of girls is a crucial development investment because
a. The social rate of return on women’s education is higher than that of men in developing
countries.
b. Education for women increases productivity
c. Educated mothers have a multiplier impact on future generations.
d. All of the previous answers
31. Evidence presented that birthrates among developing countries are lower with
a. Higher growth
b. Higher GNP per capita
c. Both (A) and (B) are correct
d. Neither (A) and (B) are correct
32. 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 virtually the same
percentage of households in inequality in the distribution of income
a. True
b. False
33. One of the components of the human development index is the under-5 mortality rate.
a. True
b. False
34. A major cause of environmental degradation in developing countries is a lack of public
transportation
a. True
b. False
35. Development economics is the study of the transformation of institutions
a. True
b. False
36. Human capital is best defined as the amount of money people have to spend on schooling.
a. True
b. False
37. An individual’s demand for education is most affected by political processes, often
unrelated to economic criteria
a. True
b. False
38. The underlying assumption of the Harrod-Domar growth model is that growth is mainly
determined by capital accumulation
a. True
b. False
39. The core values of development include reducing the inequality of income
a. True
b. False
Page 18 of 25
40. Increases in individual and national self-esteem is an Important objective of development.
a. True
b. False
41. Neutral technological progress occurs when higher output levels are achieved by more
labor intensive methods
a. True
b. False
42. Private returns to education are high, and may be higher than social returns, especially at
higher educational levels.
a. True
b. False
43. Underdevelopment is thus seen as an internally induced phenomenon according to the
neocolonial dependence model
a. True
b. False
44. Greater health capital may improve the returns to investments in education because of
a. Health is not a factor in school attendance
b. A longer life raises the rate of return to education
c. Healthier people have lower depreciation of education capital
d. B and C
45. There is a market for human capital where it can be bought and sold
a. True
b. False
46. Most successful examples of modern economic growth have occurred in a century with
temperate-zone climate
a. True
b. False
47. The neoclassical counter-revolution school supports limitations on foreign investors
a. True
b. False
48. Structural-change analysts emphasize international constraints on development only
a. True
b. False
49. A subsistence economy is an economy in which people make what they consume
a. True
b. False
values and attitudes play little role in the pace of development
a. True
b. False
51. A good definition of the meaning of development is the improvement in the fulfillment of
the potential of individuals only
a. True
b. False
52. The dependency burden is a measure of the degree to which the less developed countries
are dependent on the rich industrial countries
a. True
b. False
53. The Malthusian population trap assumes that positive correlation between population
growth and levels of per capita income
a. True
b. False
54. Rising real urban wages is an assumption of the Lewis two-sector model
a. True
b. False
Page 19 of 25
55. The normalized poverty gap (NPG) is the average amount by which the income of a poor
person falls below the poverty line.
a. True
b. False
56. The average income shortfall (AIS) is the average amount by which the income of a poor
person falls below the poverty line.
a. True
b. False
independent-dependent
a. True
b. False
58. Laborsaving technological progress occurs when higher output is achieved with an
unchanged quantity of labor inputs
a. True
b. False
59. A major cause of environmental degradation in developing countries is rapid urbanization
a. True
b. False
programs because of lack of program focus on the needs of the country
a. True
b. False
61. The annual income that can be consumed without diminishing the total capital assets of a
nation is national income
a. True
b. False
a. Increasing exports by one half
b. Develop a global partnership for development
c. Reduce by three-quarters the maternal mortality ratio
d. All of the above
63. An individual’s demand for education is most affected by
a. Direct costs of schooling
b. Indirect costs of schooling
c. Expected income benefits
d. All of the previous answer
a. Economic growth
b. Education
c. Both (A) and (B)
d. Neither (A) and (B)
65. Which of the following will cause the largest reduction in the birthrate?
a. an increase in the opportunity cost of a woman’s time
b. education becomes less available
c. Both (A) and (B)
66. The underlying assumption of the Harrod-Domar growth model is that
a. the incremental capital-output ratio is given by C=K/Y.
b. growth can be sustained only if agricultural productivity rises
c. developing countries save too much and invest too little
d. all of the above
67. The Malthusian population trap assumes that fertility decreases with per capita income.
a. True
b. False
Page 20 of 25
68. What conclusion can be reached from the following data on income shares?
Percentage of Income Received by
Lowest 40% Highest 20%
Bangladesh 17.3 45.3
Indonesia 50 25
a. absolute poverty is more widespread in Bangladesh
b. the size distribution of income is more unequal in Bangladesh
c. Bangladesh had adopted a strategy of redistribution with growth
d. growth in Bangladesh is calculated using poverty weights rather than income weights
69. The Gini coefficient provides a measure of
a. the level of poverty
b. disguised unemployment
c. the rate of growth
d. none of the previous answer
a. Raise levels of living
b. Increasing income per person
c. To be a person
d. All of the above
a. Raise levels of living
b. To be able to choose
c. Expand range of economic and social choices
d. All of the above
72. Which of the following would most likely reduce the birthrate?
a. an increase in the opportunity cost of a woman’s time
b. a decline in the availability of secondary education
c. Both (A) and (B)
73. Rising marginal product of labor in the rural sector is an assumption of the Lewis two-
sector model
a. True
b. False
a. A longer life raises the rate of return to education
b. A longer life decreases the rate of return to education
c. Healthier people have higher depreciation of education capital
d. All of the previous answer
75. Capital-saving technological progress occurs when higher output levels are achieved with
the same quantity of inputs of capital.
a. True
b. False
76. Ground water contamination is environmental problems are largely caused by persistent
poverty
a. True
b. False
programs because of increasing returns to scale in each individual’s education
a. True
b. False
center-periphery
a. True
b. False
Page 21 of 25
from conditions in the developing world in that there were more opportunities for
development assistance.
a. True
b. False
80. One of the components of the human development index is life expectancy at birth.
a. True
b. False
81. A newly industrialized country is any country that has moved out of lower income status.
a. True
b. False
82. Sustainable development means imbalance between economic growth and environmental
preservation
a. True
b. False
83. A subsistence economy is an economy in which people receive food for pay
a. True
b. False
84. A good definition of the meaning of development is the improvement in the quality of life
only.
a. True
b. False
85. There is a market for physical capital and human capital where it can be bought and sold
a. True
b. False
people in developing societies do less utility-maximizing
a. True
b. False
87. The average poverty gap (APG) is the measure income shortfall and useful when we want
a unit less measure of the gap for easier comparisons.
a. True
b. False
88. The normalized poverty gap (NPG) is the measure income shortfall and useful when we
want a unit less measure of the gap for easier comparisons.
a. True
b. False
89. Studies show that improved education of women in developing countries leads to
a. lower infant mortality
b. educated mothers have a multiplier impact on future generations
c. lower international dependence
d. A and B
90. With modern sector enlargement growth, inequality will
a. Improve
b. Worsen
c. Improve or worsen
91. Kuznets’ inverted-U hypothesis
a. implies that things must get worse before they get better
b. suggests that inequality will improve and then worsen as a country grows
c. points out six characteristics of modern economic growth
d. none of the previous answer
92. One of components of the human development index is the gross school enrollment ratio.
a. True
b. False
Page 22 of 25
93. The supply of public school places is determined by expected income benefits.
a. True
b. False
94. Surplus labor in the urban sector is an assumption of the Lewis two-sector model.
a. True
b. False
95. Even after a decline in birthrates to replacement levels, population growth continues
because of a large young population that widens the potential parent base.
a. True
b. False
a. Increasing exports by one half
b. Reduce child mortality
c. Ensure that all boys and girls complete a full course of primary schooling
d. All of the above
a. Health is a factor in school attendance
b. A longer life decreases the rate of return to education
c. Healthier people have higher depreciation of education capital
d. All of the above
98. The underlying assumption of the Harrod-Domar growth model is that growth can be
sustained only if agricultural productivity rises
a. True
b. False
99. The expansion of available choices is an important objective of development
a. True
b. False
100. Neutral technological progress occurs when higher output levels are achieved with the
same quantity and combinations of factor inputs.
a. True
b. False
101. The core values of development include increase availability of life-sustaining.
a. True
b. False
from conditions in the developing world in that population growth rates were higher
a. True
b. False
103. The false paradigm model attributes lack of development to inadequate attention to
price incentives
a. True
b. False
104. Human capital is best defined as the average education level of the population.
a. True
b. False
105. Development economics is the study of the alleviation of absolute poverty.
a. True
b. False
106. Deforestation is environmental problems are largely caused by persistent poverty.
a. True
b. False
107. Most successful examples of modern economic growth have occurred in a country with
a market economy.
a. True
b. False
Page 23 of 25
108. The core values of development include the ability to meet basic needs.
a. True
b. False
109. One of the components of the human development index is
a. The under-5 mortality rate
b. The rate of undernourishment
c. The crude birth rate
d. Gross school enrollment ratio
110. According to the dependence theory, the developed world is known as the
a. backward areas
b. periphery
c. first world
d. center
111. Average income shortfall (AIS) is the
a. amount of money per day it would take to bring every poor person in an economy up to
our defined minimum income standards.
b. Percentage of a country’s total consumption necessary to bring everyone in the
country below the poverty line up to the line.
c. Measure income shortfall and useful when we want a unit less measure of the gap for
easier comparisons
d. The average amount by which the income of a poor falls below the poverty line.
112. Total poverty gap (TPG) is the
easier comparisons
113. Normalized poverty gap (NPG) is the
easier comparisons
a. Economic growth
b. Poverty reduction
c. Both (A) and (B)
115. According to Kuznets, in the process of development inequality in an economy will
normally
a. first fall and then rise
b. remain about the same
c. show no definite pattern
d. None of the previous answer.
116.The annual income that can be consumed without diminishing the total capital assets of a
nation is
a. National income
b. environmental capital stock.
c. per capita income.
Page 24 of 25
117.Average income shortfall (AIS) is the amount of money per day it would take to bring
every poor person in an economy up to our defined minimum income standards.
a. True
b. False
118. One of the components of the human development index is the percentage of the
population who are high school graduates
a. True
b. False
119.The dependency burden is the average number of children that a woman gives birth to
during her lifetime
a. True
b. False
120. A subsistence economy is an economy in which people make what they produce
a. True
b. False
foreign exchange rate conversions to U.S. dollars
a. True
b. False
122. There is a market for physical capital where it can be bought and sold
a. True
b. False
123. A major cause of environmental degradation in developing countries is population
growth
a. True
b. False
124. The linear stages theory of economic growth fails to recognize that increased
investment is both a necessary and a sufficient condition
a. True
b. False
125. Sustainable development means emphasizing the role of government
a. True
b. False
a. Eradicate extreme poverty and hunger
b. Universal primary education
c. Promote gender equality and empower women
d. All of the above
127. In stage I of the demographic transition
128. The supply of public school places is determined by direct and indirect costs of
schooling.
a. True
b. False
129. The hidden momentum of population growth is caused by population age structure.
a. True
b. False
130. Neutral technological progress occurs when higher output levels are achieved.
a. True
b. False
Page 25 of 25

Final Economic Development Test Bank.2023

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Final Economic Development Test Bank.2023

Uploaded by

Copyright:

Available Formats

Test Bank

Chapter (1) MCQs

Chapter (3) MCQs

Chapter (4) MCQs

a. absolute poverty is more widespread in Bangladesh

Chapter (5) MCQs

Chapter (6) MCQs

1. The axes of Lorenz Curve are:

10. The axes of Lorenz Curve are:

You might also like