ECON3880 TEST #1 Summer II, 2011

Multiple Choice Questions & Problems

1. Countriestendtobeclassifiedasmoreorlessdevelopedbasedon
a. theliteracyrate.
b. thepovertyrate.
*c. thelevelofincomepercapita.
d. thetypesofgoodstheyproduce.
2. Whichofthefollowingdemonstratesinternationalinterdependence?
a. theoilshocks
b. thedebtcrisis
c. globalwarming
*d. alloftheabove.
3. Asubsistenceeconomyis
a. averylowincomeeconomy.
*b. aneconomyinwhichpeoplemakewhattheyconsume.
c. aneconomyinwhichpeoplereceivefoodforpay.
d. alloftheabove.
4. Developmenteconomicsisthestudyofthe
a. alleviationofabsolutepoverty.
b. transformationofinstitutions.

c. allocationofresourcesindevelopingcountries.
*d. alloftheabove.
5. Developmenteconomicsmusthaveascopewiderthantraditionaleconomicsbecause
a. valuesandattitudesplaylittleroleinthepaceofdevelopment.
b. peopleindevelopingsocietiesdolessutilitymaximizing.
*c. transformationofsocialinstitutionsisnecessaryfordevelopment.
d. alloftheabove.
6. Agooddefinitionofthemeaningofdevelopmentisthe
a. eliminationofabsolutepoverty.
b. improvementinthequalityoflife.
c. fulfillmentofthepotentialofindividuals.
*d. alloftheabove.
7. Whichofthefollowingisnotanimportantobjectiveofdevelopment?
a. increasesinpercapitaincome
b. theexpansionofavailablechoices
c. increasesinindividualandnationalselfesteem
*d. alloftheaboveareimportantobjectivesofdevelopment

8. TheMillenniumDevelopmentGoalsinclude

a.
*b.
c.
d.

eliminatingtheproportionofpeoplelivingonlessthan$1perday.
universalprimaryeducation.
increasingexportsbyonehalf.
alloftheabove.

9. Thecorevaluesofdevelopmentinclude
a. increasingincomeperperson.
b. reducingtheinequalityofincome.
*c. theabilitytomeetbasicneeds.
d. alloftheabove.
10. Itisnotpossibleforacountrytoexperience
*a. economicdevelopmentwithouteconomicgrowth.
b. economicgrowthwithouteconomicdevelopment.
c. economicgrowthandeconomicdevelopmentsimultaneously.
d. both(a)and(b)arecorrect.
11. Anexampleofanuppermiddleincomecountryis
a. India.
*b. Brazil.
c. Indonesia.
d. Nigeria.
12. Anewlyindustrializedcountryis
a. thesameasahighincomecountry.
b. anycountrythathasexperiencedsustainedgrowthinindustry.
*c. aspecialclassificationgiventosomeuppermiddleincomecountriesthathave
achievedrelativelyadvancedmanufacturingsectors.
d. anycountrythathasmovedoutoflowerincomestatus.

13. Whichofthefollowingisnotamiddleincomecountry?

a.
b.
*c.
d.

Brazil
Thailand
Pakistan
Argentina

14. Whichofthefollowingisalowincomecountry?
a. Mexico
b. Thailand
c. Turkey
*d. India
15. Oneofthecomponentsofthehumandevelopmentindexis
a. thepercentageofthepopulationwhoarehighschoolgraduates.
b. theaveragedailyintakeofprotein.
*c. lifeexpectancyatbirth.
d. thenumberofdoctorsperhundredpeopleinthepopulation.
16. Whatpercentoftheworldsnationshaveatleastfivesignificantethnicpopulations?
a. 010
b. 1020
c. 2030
d. 3040
*e. over40

17. Whatfractionofdevelopingcountrieshaverecentlyexperiencedsomeformofsignificantinterethnic
conflict?
a. lessthanonetenth
b. atenthtoonequarter
c. onequartertoonehalf
*d. overonehalf
18. WhichofthefollowingAfricancountrieshasrecentlyexperiencedwidespreaddeathanddestruction
duetoethnicorclanbasedconflict?
a. Rwanda
b. Zaire
c. Somalia
*d. alloftheabove
19. Whichmeasureusesacommonsetofinternationalpricesforallgoodsandservicesproduced?
*a. purchasingpowerparityincomelevels
b. GNPpricedeflators
c. foreignexchangerateconversionstoU.S.dollars
d. theexchangerate

20. Thenumberofunitsofdevelopingcountrycurrencyrequiredtopurchaseabasketofgoodsand
servicesinadevelopingcountrythatcostsonedollarintheU.S.isgivenby
a. GNPpricedeflator.

b. HumanDevelopmentIndexranking.
*c. purchasingpowerparity.
d. theexchangerate.
21. Whichofthefollowingisnotapolicyproposaloftheneoclassicalcounterrevolutionschool?
a. Promotingfreetrade
b. Privatizingstateownedenterprises
c. Welcomingmultinationalcorporations
*d. Promotingtradeunions
22. WhichofthefollowingisanassumptionoftheLewistwosectormodel?
*a. Surpluslaborintheruralsector
b. Highunemploymentintheurbanmodernsector
c. Risingrealurbanwages
d. Risingmarginalproductoflaborintheruralsector
23. Thefalseparadigmmodelattributeslackofdevelopmentto
a. Inadequateattentiontopriceincentives.
*b. Inappropriateadvicefromrichcountryeconomists.
c. Lowlevelsofsavingsandinvestment.
d. Alackofgovernmentregulation.
24. Whichofthefollowingisacriticismoftheneoclassicalcounterrevolutionschoolsapproach?

a.
b.
c.
*d.

Marketsarenotcompetitiveindevelopingcountries.
Externalitiesarecommonindevelopingcountries.
Inequalitymayworsenwheninterventionsareremovedindevelopingcountries.
Alloftheabove.

25. Whichofthefollowingapproachesdoesnotofferaninternationaldependenceexplanationof
underdevelopment?
a. Thefalseparadigmmodel
*b. Theneoclassicalcounterrevolution
c. Thedualisticdevelopmentmodel
d. Theneocolonialdependencemodel
26. Theneoclassicalcounterrevolutionschoolsupports
a. Traderestrictions.
b. Stateownedenterprises.
*c. Eliminatinggovernmentregulations.
d. Limitationsonforeigninvestors.
27. Implicitassumptionsfromwhichtheoriesevolveareknownas
*a. Aparadigm.
b. Biases.
c. Stylizedfacts.
d. Normativeeconomics.
28. Onwhichofthefollowingdoestheneoclassicalcounterrevolutionschoolmostblame
underdevelopment?
*a. Misguidedgovernmentpolicies
b. Relativelyrigidculturaltraditions
c. Thelegacyofcolonialism
d. Unfairtradepracticesonthepartofdevelopedcountries
29. Accordingtothetheoryofstructuralpatternsofdevelopment,whichofthefollowingtendstooccur
asacountrydevelops?
*a. Ashiftfromagriculturetoindustryandservices
b. Anincreaseinthepercentageofincomespentonfood
c. Growthoftheruralsector
d. AdeclineintradeasashareofGNP
30. Inthepublicchoice(ornewpoliticaleconomy)approachtodevelopmenttheemphasisison
a. growthintheruralsector.
*b. theselfinterestedbehaviorofpublicofficials.
c. thedependenceofLDCsonformercolonialpowers.
d. theinherentefficiencyofdevelopingcountrymarkets.
31. Theabsolutepovertyline
a. decreasesasrealincomegrows.
b. showstheaverageincomeofthelowestincomegroup.

c. canbemeasuredwiththeLorenzcurve.
*d. Noneoftheabove.
32. TheGinicoefficientprovidesameasureof
a. thelevelofpoverty.
*b. thelevelofrelativeinequality.
c. disguisedunemployment.
d. therateofgrowth.
33. KuznetsinvertedUhypothesis
a. impliesthatthingsmustgetworsebeforetheygetbetter.
*b. suggeststhatinequalitywillworsenandthenimproveasacountrygrows.
c. suggeststhatinequalitywillimproveandthenworsenasacountrygrows.
d. pointsoutsixcharacteristicsofmoderneconomicgrowth.
34. AccordingtoKuznets,intheprocessofdevelopmentinequalityinaneconomywillnormally
*a. firstriseandthenfall.
b. firstfallandthenrise.
c. remainaboutthesame.
d. shownodefinitepattern.
35. Povertyisbetterstudiedwithsizedistributionmeasuresthanwiththosebasedonfactordistribution
because
a. laborincomemaybehighlyconcentratedinwellpaidmodernsectorworkers.
b. somepoorfarmersmayreceiveasizableshareofincomeinrent.
c. incomefromnonmarketactivities,suchasforaging,maybeimportant.
*d. Alloftheabove.
36. Thenumberofpeopleintheworldwhoareabsolutelypoorisclosestto
a. aquarterbillion.
b. ahalfbillion.
*c. onebillion.
d. twobillion.
e. fourbillion.
37. Withmodernsectorenrichmentgrowth,inequalitywill
a. firstriseandthenfall.
b. firstfallandthenrise.
c. remainaboutthesame.
*d. Noneoftheabove.
38. Withmodernsectorenlargementgrowth,inequalitywill
*a. firstriseandthenfall.
b. firstfallandthenrise.
c. remainaboutthesame.
d. Alloftheabove.
39. Higherincomecountriestendtohavelowerlevelsofabsolutepovertybecausethey
a. havemoreemploymentopportunities.

b. havemorepublicassistance.
c. havegreaterentrepreneurshipopportunities.
*d. Alloftheabove.
40. Oneofthecharacteristicsofthepooristhattheyare
a. morelikelytobeemployedinthemodernindustrialsector.
b. morelikelytocomefromsmallfamilies.
c. morelikelytobewelleducated.
*d. morelikelytoliveinaruralarea.
41. Whichofthefollowingpoliciesmightincreaselaborintensityinindustry?
a. adeclineinthecostofcredit
*b. adeclineintheminimumwagerate
c. adeclineintheelasticityofsubstitution
d. Alloftheabove
42. Whichofthefollowingpoliciesmaydecreasethelevelofcapitalintensityinindustry?
a. anincreaseinthecostofcapital
b. adecreaseintheminimumwage
c. anincreaseintheelasticityofsubstitution
*d. Alloftheabove
43. TheAhluwaliaCheneryWelfareIndex
a. isamethodusedtomeasurechangesinabsolutepoverty.
*b. showsthevaluejudgementimplicationsofusingthechangeinincomepercapitaasameasureof
thechangeindevelopment.
c. isamethodusedtomeasurechangesininequality.
d. isamethodusedtomeasurethegrowthrateofGDP.
44. Aboutwhatpercentoftheworldspoorestpeoplearefemale?
a. 30
b. 50
*c. 70
d. 90
45. AbouthowmanygirlsandwomenaresaidtobemissinginLDCs?
a. 2million
b. 20million
*c. 200million
d. 2billion
46. Whichofthefollowinggroupsis(are)morelikelytobepoor?
a. Minorities
b. Indigenouspeople
c. Women
*d. Alloftheabove.
47. Distributionofincomeaccordingtopercentiles,suchasthehighest40percentorlowest20percent
isknownasthe_______________distributionofincome.

*a.
b.
c.
d.

size
functional
GNPweighted
equalweighted

48. Whatconclusioncanbereachedfromthefollowingdataonincomeshares?

Bangladesh
Indonesia
a.
*b.
c.
d.

PercentageofIncomeReceivedby
Lowest40%
Highest20%
17.3
45.3
14.4
49.4

absolutepovertyismorewidespreadinBangladesh
thesizedistributionofincomeismoreunequalinIndonesia
Bangladeshhadadoptedastrategyofredistributionwithgrowth
growthinBangladeshiscalculatedusingpovertyweightsratherthanincomeweights

49. Developingcountrieswhohaveadoptedcapitalintensivetechnologiestendtohave
*a. relativelyhigherGinicoefficients.
b. relativelylowerGinicoefficients.
c. Ginicoefficientsequaltoone.
d. Ginicoefficientsequaltozero.
50. Thepovertygapisthe
a. absolutenumberofpeoplebelowtheinternationalpovertyline.
b. percentageofthepopulationbelowtheinternationalpovertyline.
c. consumption(measuredindollars)necessarytobringeveryonelivingbelowthepovertylineup
tothepovertyline.
*d. percentageofacountrystotalconsumptionnecessarytobringeveryoneinthecountryliving
belowthepovertyline,uptothepovertyline.