Economic Growth and Development
Question Bank
Course Introduction
This course explores the fundamental concepts, theories, and empirical evidence related to economic growth and development. Students will examine the factors that drive long-term increases in living standards, differences in growth rates across countries, and challenges faced by developing economies. Topics include the roles of capital accumulation, technological change, human capital, institutions, globalization, income inequality, and policy interventions. Through case studies and data analysis, the course provides a thorough understanding of how economies evolve and the strategies governments and organizations use to promote sustainable development and reduce poverty.
Recommended Textbook
Economic Development 10th Edition by Michael
P. Todaro
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16 Chapters
500 Verified Questions
500 Flashcards
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Page 2
Chapter 1: Economics, Institutions, and Development: a Global Perspective
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22 Verified Questions
22 Flashcards
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Sample Questions
Q1) How is happiness related to development?
Answer: Answers should make reference to the correlation between happiness and income level as well as touch on the connection between happiness and social relationships, personal and democratic freedoms, religious beliefs, and health, among other factors listed on Page 20. Further, answers should include a discussion on happiness as being a part of Amartya Sen's concept of functionings.
Q2) In reviewing discussions of life in developing countries, what is it about lifestyles in the low-income countries compared with lifestyles in the high-income countries that most strikes you? Why?
Answer: This is an open-ended question to stimulate reflection.
Q3) 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
Q4) It has been said that "underdevelopment is a state of mind." Comment.
Answer: You may look for a discussion of the role of modern values in the development process, as on Pages 13-14 of the text.
Page 3
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Chapter 2: Comparative Economic Development
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Sample Questions
Q1) Which of the following is a low-income country?
A)Mexico
B)Thailand
C)Turkey
D) India
Answer: D
Q2) Are living standards in developed and developing countries converging? Give evidence to support your answer.
Answer: Cultural factors effect the development and amount of emphasis put on education, institutions, and how effective civil society is. An important part of the answer should be how the role of culture has not been clearly established due to its complexity.
Q3) In what way(s) do the development paths chosen by Pakistan and Bangladesh differ? What are the main factors that have contributed to these differing paths?
Answer: The key differences are the aspects of economic development discussed in the chapter. The case study at the end of the chapter provides comparative figures for the two countries and the main factors contributing to the divergent paths.
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4
Chapter 3: Classic Theories of Economic Growth and Development
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31 Verified Questions
31 Flashcards
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Sample Questions
Q1) Which of the following are components of economic growth?
A)Growth in labor force
B)Technological progress
C)Investment
D) All of the above
Answer: D
Q2) Implicit assumptions from which theories evolve are known as
A)A paradigm.
B)Biases.
C)Stylized facts.
D) Normative economics.
Answer: A
Q3) What are the main differences between the linear stages and international dependency models?of development?
Answer: Lack of development is generated internally with the linear stages model, and is attributed to a lack of savings and investment. It is generated externally in the dependency model, and is the result of actions taken by the developed countries.
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Page 5
Chapter 4: Contemporary Models of Development and Underdevelopment
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Sample Questions
Q1) Explain what is meant by the term coordination failure and provide an example.
Q2) 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.
Q3) In contrast to the earlier neoclassical models of economic growth, in endogenous growth models, there is more emphasis on A)human capital.
B)externalities.
C)increasing returns to scale.
D) All of the above.
Q4) The S-curve is used to illustrate
A)the typical path taken by the current account over time.
B)economic fluctuations in the economy.
C)the typical growth path of a developing economy.
D) the existence of multiple equilibria.
Q5) Explain how relatively high wages in the modern sector, as compared to the traditional sector, can lead to a coordination failure.
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Chapter 5: Poverty, Inequality, and Development
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44 Flashcards
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Sample Questions
Q1) 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
Q2) Using a Lorenz curve diagram, explain how to calculate the Gini coefficient.
Q3) 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.
Q4) What is a Lorenz curve? Draw one, labeling the axes.
Q5) Just what is it that makes a technology "appropriate" for a developing country?
Q6) Generally speaking, higher-income countries tend to have less income inequality than low-income countries, however this does not always hold true. What could cause a low-income country to have low-income inequality?
Q7) "The 1980s were a lost decade for the absolutely poor." Evaluate this statement.
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Chapter 6: Population Growth and Economic Development:
Causes, Consequences, and Controversies
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Sample Questions
Q1) Explain what is meant by "investment in children," describing the goals and methods of the parents.
Q2) 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.
Q3) Provide a concise statement about the relationship between population growth and absolute poverty, female wages, rural-urban migration, availability of pensions, availability of healthcare, availability of education, and rate of investment.
Q4) 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
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Chapter 7: Urbanization and Ruralurban Migration: Theory and Policy
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23 Flashcards
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Sample Questions
Q1) The informal sector exhibits
A)free entry.
B)labor intensive methods.
C)small, competitive firms.
D) all of the above.
Q2) Discuss the importance of rural-urban migration as a source of urban population growth in various parts of the developing world, being as specific as you can.
Q3) Other things constant, the elimination of factor price distortions in developing countries would?most likely
A)decrease rural-urban migration.
B)have little effect on rural-urban migration.
C)increase rural-urban migration.
D) increase urbanization.
Q4) Are developing-country cities too large, too small, or about right in size? Justify your answer with evidence from developing economies.
Q5) How could the removal of labor market distortions increase employment even if the elasticity of factor substitution is very low?
Page 9
Q6) Why is urban giantism less prevalent in mature democracies?
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Chapter 8: Human Capital: Education and Health in Economic Development
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34 Flashcards
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Sample Questions
Q1) 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.
Q2) 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.
Q3) What is educational inequality and how is it measured? Why is it important to measure the degree of educational inequality in a country? Explain your answer.
Q4) What are the critical health challenges facing developing countries today and what measure(s) are being taken to confront these challenges? Explain your answer.
Q5) Explain some of the reasons why developing countries have not realized a greater positive development impact from their higher education programs.
Q6) Is child labor a problem in developing countries? Explain.
Q7) Why is eradicating child labor seen as an economic investment?
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Chapter 9: Agricultural Transformation and Rural Development
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Sample Questions
Q1) An agrarian system refers to A)the pattern of land ownership.
B)the type of crops grown.
C)the processing of agricultural commodities.
D) an economy that has no industry.
Q2) What is (are) the key characteristic(s) of the agrarian system in sub-Saharan Africa?
Q3) Crops produced entirely for the market are known as A)basic crops.
B)mixed crops.
C)hybrid crops.
D) cash crops.
Q4) What are the implications for a successful agricultural development strategy of the finding that women perform 60 percent to 90 percent of all work in the traditional rural areas?
Q5) Absentee landowners characterize the agrarian system of A)Asia.
B)Latin America.
C)Sub-Saharan Africa.
D) All of the above.
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Chapter 10: The Environment and Development
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Sample Questions
Q1) Describe the basic issues involved in setting up a system of national accounts that includes the value of environmental capital and its loss.
Q2) In what way is better protection of the environment a possible result of successful development?
Q3) 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.
Q4) 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.
Q5) Why might it be in the direct economic interest of the United States to finance rain forest conservation programs in the Amazon?
Q6) Describe the effect of the loss of biodiversity on productivity and health.
Q7) Describe the costs of deforestation.
Page 12
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Chapter 11: Development Policymaking and the Roles of
Market, State, and Civil Society
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Sample Questions
Q1) Why must projects be appraised? What do we learn from project appraisals?
Q2) A shadow price is
A)the price in the previous period.
B)the price in the next period.
C)the social value of a good or service.
D) the market value of a good or service.
E) none of the above.
Q3) If the population growth rate is 2%, the incremental capital output ratio is 3, the saving ratio is 24% and the depreciation rate is 5%, the rate of growth of income per person is
A)1%.
B)2%.
C)3%.
D) 5%.
E) 8%.
Q4) What are accounting, or "shadow" prices for project appraisal? In what way do they differ from market prices, and why do we need them? Additional question or part of question: How can reference to world prices help countries gauge the real opportunity costs of development projects?
Page 13
Q5) How does the Washington Consensus differ from the Santiago Consensus?
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Chapter 12: International Trade Theory and Development Strategy
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Sample Questions
Q1) Which of the following is an argument in favor of trade liberalization?
A)Increased investment
B)Infant industry
C)Fluctuating export earnings
D) Increased government revenue
Q2) The effective rate of protection is
A)value added with protection divided by value added without protection.
B)value added with protection.
C)value added without protection.
D) (value added with protection minus value added without protection) divided by value added without protection.
Q3) An economic community
A)attempts to raise prices by restricting quantity.
B)seeks to stabilize commodity prices.
C)seeks concessional loans.
D) imposes a common external tariff.
E) None of the above.
Q4) Briefly, what are the major causes of export earnings instability for developing countries?
Q5) Explain the difference between nominal and effective tariffs.
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Chapter 13: Balance of Payments, Developing-Country
Debt, and the Macroeconomic Stabilization Controversy
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33 Verified Questions
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Sample Questions
Q1) Outline the principal sources of the debt crisis.
Q2) The flow of private foreign investment and grants and loans is included in a country's
A)current account.
B)capital account.
C)cash account.
D) None of the above.
Q3) If the current account is a deficit of 25 then
A)the capital account is a surplus of 25.
B)the cash account is a surplus of 25.
C)the capital account is a surplus of 25 if the cash account is zero.
D) the cash account is a deficit of 25.
Q4) How did the Mexican debt crisis of the early 1980s come about? How has the Mexican economy coped during the past 20 years, in the aftermath of the debt crisis? What has been the legacy of the debt crisis for the Mexican economy?
Q5) About how much debt is held by the developing world (as a whole)? Which countries hold the most debt? Are these the countries where the debt burden is the greatest?
Q7) Why may the debt crisis be only "sleeping," rather than "dead?" Page 15
Q6) Discuss the options for financing a balance of payments deficit.
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Page 16
Chapter 14: Foreign Finance, Investment, and Aid: Controversies and Opportunities
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Sample Questions
Q1) During 1990-2003, as a percentage of total resources flowed to developing countries, the share of official flows
A)remained relatively constant.
B)increased by a relatively small percentage.
C)increased by a relatively large percentage.
D) decreased by a relatively small percentage.
E) decreased by a relatively large percentage.
Q2) As a percentage of GNI, which of the following countries provides the greatest amount of ?foreign aid?
A)United Kingdom
B)United States
C)Italy
D) Sweden
Q3) The developing area receiving the largest share of direct foreign investment is/are
A)Africa.
B)Asia
C)Latin America.
D) transition economies.
Q4) Explain the motives of developed countries in providing foreign aid.
Page 17
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Chapter 15: Finance and Fiscal Policy for Development
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Sample Questions
Q1) Compare and contrast the level of military spending in developing and developed economies. Compare and contrast the level of military and social spending in developing economies. What evidence is there regarding the link between economic development and military spending?
Q2) Why are women considered to be more creditworthy for microloans?
Q3) What is a development bank? What are some of the reasons they have not had greater success?
Q4) Compare and contrast the workings of the organized and unorganized money markets in developing countries.
Q5) Explain how group lending works.
Q6) What are the key elements that need to be considered in developing an optimal sequence of financial sector liberalization? Will the order differ across countries? Why or why not?
Q7) Why do NGOs target women borrowers while making microloans?
Q8) Which of the following is an objective of macroeconomic stabilization?
A)Eliminating current account deficits
B)Controlling inflation
C)Restoring fiscal balance
D) All of the above
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Chapter 16: Some Critical Issues for the Twenty-First Century
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Sample Questions
Q1) The developing region in which per capita income, food production, and industry have declined ?over an extended period is
A)sub-Saharan Africa.
B)East Asia.
C)Lain America.
D) South Asia.
E) all of the above.f.none of the above.
Q2) Which of the following African countries has experienced higher school enrollments and lower ?child mortality in the past few years?
A)Angola
B)Congo
C)Mozambique
D) None of the above
Q3) Explain how the cost of rain forest preservation can be lowered for developing countries?
Q4) "We have a long way to go in development, but we have already come very far."
Justify both halves of this statement with reference to any statistics you remember (you may approximate).
Q5) What is the relationship between land reform and rain forest preservation?
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