ECON3880 TEST #1 Summer II, 2011
Multiple Choice Questions & Problems
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.
10. It is not possible for a country to experience
*a. economic development without economic growth.
b. economic growth without economic development.
c. economic growth and economic development simultaneously.
d. both (a) and (b) are correct.
11. An example of an upper-middle income country is
a. India.
*b. Brazil.
c. Indonesia.
d. Nigeria.
12. 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.
13. Which of the following is not a middle-income country?
a. Brazil
b. Thailand
*c. Pakistan
d. Argentina
14. Which of the following is a low-income country?
a. Mexico
b. Thailand
c. Turkey
*d. India
15. 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.
16. 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
17. 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
18. Which of the following African countries has recently experienced widespread death and destruction
due to ethnic or clan based conflict?
a. Rwanda
b. Zaire
c. Somalia
*d. all of the above
19. Which measure uses a common set of international prices for all goods and services produced?
*a. purchasing power parity income levels
b. GNP price deflators
c. foreign exchange rate conversions to U.S. dollars
d. the exchange rate
20. 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. GNP price deflator.
b. Human Development Index ranking.
*c. purchasing power parity.
d. the exchange rate.
21. 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
22. 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
23. 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.
24. 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.
25. 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
26. The neoclassical counter-revolution school supports
a. Trade restrictions.
b. State-owned enterprises.
*c. Eliminating government regulations.
d. Limitations on foreign investors.
27. Implicit assumptions from which theories evolve are known as
*a. A paradigm.
b. Biases.
c. Stylized facts.
d. Normative economics.
28. 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
29. 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
30. 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.
31. 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.
32. 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.
33. 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.
34. 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.
d. show no definite pattern.
35. Poverty is better studied with size distribution measures than with 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.
36. The number of people in the world who are absolutely poor is closest to
a. a quarter-billion.
b. a half-billion.
*c. one billion.
d. two billion.
e. four billion.
37. With modern sector enrichment growth, inequality will
a. first rise and then fall.
b. first fall and then rise.
c. remain about the same.
*d. None of the above.
38. With modern sector enlargement growth, inequality will
*a. first rise and then fall.
b. first fall and then rise.
c. remain about the same.
d. All of the above.
39. Higher-income countries tend to have lower levels of absolute poverty because they
a. have more employment opportunities.
b. have more public assistance.
c. have greater entrepreneurship opportunities.
*d. All of the above.
40. 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.
41. 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
42. 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
43. The Ahluwalia-Chenery Welfare Index
a. is a method used to measure changes in absolute poverty.
*b. shows the value judgement 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.
44. About what percent of the world’s poorest people are female?
a. 30
b. 50
*c. 70
d. 90
45. About how many girls and women are said to be “missing” in LDCs?
a. 2 million
b. 20 million
*c. 200 million
d. 2 billion
46. Which of the following groups is (are) more likely to be poor?
a. Minorities
b. Indigenous people
c. Women
*d. All of the above.
47. Distribution of income according to percentiles, such as the highest 40 percent or lowest 20 percent
is known as the _______________ distribution of income.
*a. size
b. functional
c. GNP-weighted
d. equal-weighted
48. What conclusion can be reached from the following data on income shares?
Bangladesh
Indonesia
a.
*b.
c.
d.
Percentage of Income Received by
Lowest 40%
Highest 20%
17.3
45.3
14.4
49.4
absolute poverty is more widespread in Bangladesh
the size distribution of income is more unequal in Indonesia
Bangladesh had adopted a strategy of redistribution with growth
growth in Bangladesh is calculated using poverty weights rather than income weights
49. 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.
50. 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 living below the poverty line up
to the poverty line.
*d. percentage of a country’s total consumption necessary to bring everyone in the country living
below the poverty line, up to the poverty line.