Political Economy of Development
Exam Questions
Course Introduction
The Political Economy of Development explores the complex interplay between political and economic factors shaping the development trajectories of countries around the world. This course examines theories of development and underdevelopment, focusing on how institutions, governance, policy choices, global economic integration, and historical legacies influence economic growth, inequality, and social change. Through comparative analyses and case studies, students will engage with topics such as state-led versus market-led development, the role of international organizations, the impact of colonialism, debates over foreign aid and investment, and the challenges facing developing economies in a globalized world.
Recommended Textbook
Development Economics Theory Empirical Research and Policy Analysis 1st Edition by Julie Schaffner
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Chapter 1: What Is Development Economics Good
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Sample Questions
Q1) The Public Sector refers to all of the following except:
A) governments
B) NGOs
C) any development actor
D) private market transactions
Answer: D
Q2) What is the ultimate aim in development?
A) To generate higher income per capita
B) To achieve faster economic growth
C) To make people's lives better
D) To make sure that everyone in the world is not hungry
Answer: C
Q3) Policies that intervene in the market include:
A) the government hires a contractor to build a road
B) making credit more available to stimulate investment by firms
C) Social Insurance and assistance
D) tariffs and other polices aimed at encouraging or discouraging international trade
Answer: D
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Chapter 2: Well-Being
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Sample Questions
Q1) Other than income,what is the next most common measure of a household's living standard?
A) Land
B) Real per capita consumption expenditure
C) Investment opportunities
D) Level of education of the head of the household
Answer: B
Q2) Among these four countries,one would expect that the percentage of workers who are self employed,employers and family workers is:
A) highest in Indonesia
B) highest in Malawi
C) highest in Mexico
D) highest in the United States
Answer: B
Q3) Which of the following constitutes a non-market interaction?
A) Jim Borrows money from a bank to purchase a plow
B) Shuman buys rice for his family
C) Jane works for Rob at his farm and earns a wage
D) Jim and Shuman cooperate to build a road together
Answer: D
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Chapter 3: Economic Growth
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Sample Questions
Q1) Increasing returns to scale refers to a situation that when capital and labor both double,
A) output more than doubles
B) output less than doubles
C) output just doubles
D) output does not change
Answer: A
Q2) Nominal GDP growth is calculated as the growth rate of the value of goods and services using ____ prices while real GDP growth is calculated as the growth rate of the value of goods and services using ____ prices.
A) current; real
B) current; constant
C) constant; current
D) constant; real
Answer: B
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Chapter 4: Economic Growth Theory in Historical Perspective
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Sample Questions
Q1) Using the Harrod-Domar growth model,suppose one economy has to maintain a growth rate of GDP of 10 percent per year in order to avoid a decline in the average standard of living.Assume in this economy,the saving rate s is fixed at 15%,the capital-output ratio v is 3 and the depreciation rate d is 5%,the gap of ________ in the growth rate of GDP can be provided by foreign aid.
A) 5 percent.
B) 10 percent.
C) 15 percent.
D) Foreign aid has no help in this situation.
Q2) What is the main difference between the Harrod-Domar growth model and the Lewis growth model?
A) emphasizing on saving and investment.
B) physical capital is the key to promote economic growth.
C) how to promote saving and investment.
D) empirical support.
Q3) The Neoclassical growth model assumes:
A) diminishing marginal returns.
B) population is constant.
C) endogenous technological improvement.
D) labor is in surplus.
Page 6
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Chapter 5: Poverty,Inequality and Vulnerability
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Sample Questions
Q1) All of the following is examples of Ex ante coping mechanisms except:
A) precautionary saving.
B) participation in informal insurance arrangements.
C) take out loans to smooth consumption.
D) use of insecticide-treated bed nets.
Q2) Poverty reduction efforts reduce inequality at the same time if
A) the incomes of non-poor remain unaffected.
B) the financing for the poverty reduction efforts is derived by taxing the non-poor.
C) the incomes of poor grow faster than the incomes of non-poor.
D) all of the above.
Q3) Growth policies are more likely to reduce vulnerability in the following situations except
A) raising the incomes of the poor
B) creating immunization programs
C) people moving in response to new opportunities.
D) facilitate the development of market relationships
Q4) What is involved in constructing a measure of inequality?
Q5) What is involved in constructing a measure of poverty?
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Chapter 6: Consumption, Time Allocation and Production
Choices
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Sample Questions
Q1) If consumers' income increases and the consumption for food decreases,then we can conclude:
A) food is a normal good.
B) food is an inferior good.
C) consumers are not rational.
D) this situation does not happen in developing countries.
Q2) The substitution effect can be measured by holding ________constant.
A) income
B) price of food
C) price of non-food
D) utility
Q3) Joshua has income endowment of $1,000,the price of food is $2 per unit and the price of non-food is $4 per unit.If he spent all of his income on food,how many units of food can he buy?
A) 1,000 units.
B) 250 units.
C) 500 units.
D) 0 unit.
Q4) Why is labor demand a derived demand? Explain.What is a linkage between markets?
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Chapter 7: Houesholds
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Sample Questions
Q1) If a farm household's net marketed surplus of food is negative,it means ________.
A) the household sells food in the market
B) the household buy food in the market
C) the household is losing money in the market
D) this household is a subsistence farm household
Q2) If a farm household's net market labor supply is positive,it means ________.
A) some family labor is hired out through labor markets
B) non-family labor is hired in through labor markets
C) all of the family labor is working for other farms
D) this household is a subsistence farm household
Q3) Which of the following is true about non-farm households?
A) Non-farm households are less likely than food crop farmers to consume large quantities of the goods or services they produce.
B) Non-farm households are more likely than food crop farmers to consume large quantities of the goods or services they produce.
C) Non-farm households are more likely to be net sellers in output markets
D) Increasing in food prices tend to increase the non-farm households' purchasing power.
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Chapter 8: Domestic Markets for Goods and Services
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Sample Questions
Q1) Private producers will only choose to sell their output when the benefit outweighs the cost.Which of the following could prevent a market from developing?
A) High transportation costs
B) High transfer costs
C) Poor legal system
D) All of the above could prevent a market from developing.
Q2) When middlemen lack competition it is possible that they may command significant ____________,or excess profits derived by exploiting their privileged positions.
A) Marketing rents
B) Consumer surplus
C) Marketing margin
D) Producer surplus
Q3) The ________ of Jamaica,women who carry agricultural produce to town in baskets on their heads
A) "Higglers"
B) "Wigglers"
C) "Smugglers"
D) "Carriers"
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Chapter 9: Labor Markets
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Sample Questions
Q1) Successful economic growth requires structural changes or
A) Changing the natural rate of unemployment
B) Shifts in the nature and location of economic activity
C) Increasing structural unemployment
D) Building new machines or factories
Q2) Over the course of development,the shares of manufacturing and service sectors in GDP tend to _______,while the agricultural sector _______.
A) Fall; rises
B) Fall; also falls
C) Rise; also rises
D) Rise; declines
Q3) Employment in jobs that make poor use of their skills or employ only a fraction of the labor time they are willing to offer is referred to as:
A) Underemployment
B) Unemployment
C) Is not counted as employed or unemployed
D) Is a discouraged worker phenomenon
Q4) What is the effect of a technological improvement that only affects some firms in the market?
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Chapter 10: Investment and Financial Markets
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Sample Questions
Q1) Modeling investment decisions with diverse possible states of the world when the return is realize allows economists to consider___________.
A) Risk
B) Possible unknowns in the outcomes
C) uncertainty
D) all of the above
Q2) The weighted average of the returns across all possible states of the world,where the weights are equal to the probabilities with which the different states occur is called ???????????_________.The ________ indicates how great the return is expected to be "on average."
A) Distribution; variance
B) The expected value; expected return
C) Rate of return; expected value
D) Variance; distribution
Q3) How do well-functioning markets for loanable funds encourage economic growth and allow a larger set of investors to participate in growth?
Q4) How do financial markets help economic growth?
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Chapter 11: International Markets and General Equilibrium
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Sample Questions
Q1) In the Factor Proportions Model,if the world relative price of textiles increases and Home country is a textile exporter,________.
A) Home country will produce more textiles and less chemicals
B) Home country will produce less textiles and more chemicals
C) Home country will produce more textiles and more chemicals
D) all of the above are possible
Q2) Taxes imposed on imports are called ________.
A) excise tax
B) luxury tax
C) trade tax
D) tariff
Q3) A country's terms of trade is defined as the ratio of ________ to ________.
A) its currency; foreign country's currency
B) its tariff rate; foreign country's tariff rate
C) price of its importing product; price of its exporting product
D) price of its exporting product; price of its importing product
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Chapter 12: Institutions and Cooperation
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Sample Questions
Q1) When people harvest fish,wood or water from sources held in common,they enjoy the full benefit of what they harvest ________,much of which falls on others as harvesting becomes more difficult or conflict breaks out.
A) and bear the full cost B) and bear most of the cost C) and bear only a fraction of the cost D) and bear none of the cost
Q2) Players with ________ preferences experience a utility ________ when they punish players who have defected.If this change in utility is big enough to outweigh the direct cost to a punisher of inflicting a punishment,then threats of decentralized punishment become credible.
A) neoclassical; boost
B) Lexicographic; drain
C) negative reciprocal; boost
D) positive reciprocal; drain
Q3) What is the important lesson that the prisoners' dilemma game show us?
Q4) Why do community-level institutions in developing countries merit close study? Provide three reasons.
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Page 14
Chapter 13: Policy Governance and Political Economy
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Sample Questions
Q1) Under which of the following market structures do producers take the price as given?
A) Monopoly
B) Oligopoly
C) Perfect competition
D) Monopolistic competition
Q2) How can we explain the increasing MPC curve in figure 13.1 a?.
A) Increasing marginal returns to labor
B) Increasing marginal returns to production
C) Diminishing marginal returns to production
D) Diminishing marginal returns to consumption
Q3) When consumption by one person does not reduce the potential for consumption by others good is said to be ___________.
A) Rival
B) Non-rival
C) Excludable
D) Non-excludable
Q4) How might private institutions succeed in providing public goods where markets fail? Is this likely to succeed?
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Chapter 14: Policy Analysis
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Sample Questions
Q1) A policy's objectives include_________.
A) Setting the target group
B) Social costs
C) Typically involves improving the well-being for society as w whole
D) Spillover and feedback effects
Q2) Policymakers are interested in the effects on the behavior,or choices,of those directly affected because________.
A) It can encourage socially desirable behavior
B) The behavioral responses may crowd out private market activities
C) It can create spillover and feedback affects
D) All of the above are reasons policymaker care about the behavior of those directly affected by the policy
Q3) Which of the following effects from a policy would be considered a feedback effect?
A) After a famer adopts a new technology food supply increases,which lowers the price he charges for selling his crop
B) A farmer adopts a new technology and enjoys better profits
C) Any effect on the well-being of groups other than the directly affected
D) All of the above are feedback effects
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Chapter 15: Targeted Transfer Programs
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Sample Questions
Q1) Some programs employ proxy means tests which:
A) Are less restrictive than a categorical restriction
B) Are more restrictive than means testing
C) Employ short questionnaires often called "poverty score cards"
D) Uses easy to observe characteristics such as having at least one child
Q2) Eligibility rules can include all of the following except:
A) Means testing
B) Proxy means tests
C) Poverty score cards
D) Target lifestyles
Q3) Why is a food transfer unlikely to increase food consumption by the full amount of the transfer?
A) If there is a food shortage a cash transfer may do a better job increasing consumption
B) The food transfers reduce leakages to the non-poor
C) Some of the free food can substitute for food the recipient would have purchased,and can now be used to increase spending on other goods.
D) All of the above are reasons why a food transfer may not increase food consumption by as much as intended
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Chapter 16: Workfare
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Sample Questions
Q1) Self targeting allows the government to _____________.
A) Target only those who are deserving of help
B) Discourage leakage to the non-poor at a high cost
C) Encourage leakages to the non-poor at a low cost
D) Add to asset creation speeding economic growth and long-run poverty reduction
Q2) All of the following are the primary objectives of most workfare programs except:
A) Immediate reduction of poverty for participants
B) Reduction in the vulnerability for households that might fall into the need in the future
C) Increased economic growth
D) To give poor people skills to find their own job
Q3) All of the following are potential fixed costs a poor household may incur from participating in a workfare program,except:
A) Hourly babysitting fee
B) Travel cost
C) Any cost that does not rise as the hours worked in the program rises
D) Tools
Q4) Discuss the cost and benefits or raising a program wage.
Q5) Under what conditions can workforce programs reduce vulnerability for workers?
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Chapter 17: Agricultural Market Interactions and Reforms
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Sample Questions
Q1) As a result of agricultural pricing policies prices paid by consumers may______ and the price received by producers may________.
A) Increase; decrease
B) Decrease; increase
C) stay the same; increase
D) stay the same; stay the same
Q2) When governments tax,subsidize or regulate market transactions they are _________ in the market
A) disturbing
B) interrupting
C) intervening
D) improving
Q3) Which of the following spillover effects from a price increase would be a negative?
A) Increased wages reduce profits
B) If aggregate income rises then demand for all other normal goods increase
C) Increase in demand for complimentary non-labor tools
D) Decreased wages increase profits
Q4) How can increasing the export tax rate may even cause tax revenue to fall?
Q5) How can an increase in the price of a good introduce intra-household effects?
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Chapter 18: Infrastructure Policies and Programs
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Sample Questions
Q1) Which of the following is not likely to diminish efficiency?
A) Lack of adequate expertise and information
B) Lack of adequate operation and maintenance budgets
C) When government bureaucrats are not adequately held accountable
D) When households are required to pay a user fee for the infrastructure service
Q2) Even when households choose to use new infrastructure services,they may fail to derive all the benefits policymakers might hope for,because they do not put the services to intended uses.Give three examples of users who employ a new infrastructure service but fail to enjoy all of its intended benefits.
Q3) Which of the following is a benefit associated with raising fees from a subsidized level to a level that just covers the cost of service provision?
A) Reduction of infrastructure sector's net drain on the government budget
B) Reduction in positive spillovers
C) Increases the use of services by poorer households where the social cost outweighs the social benefit
D) May reduce the use to a point where the marginal social benefit of one more unit is greater than the marginal social cost of one more unit.
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Chapter 19: Education
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Sample Questions
Q1) Why is sending a child to school considered to be an investment decision?
A) Because a parent would only send a child to school if the perceived costs outweighed the benefits
B) Because many of the costs must be borne now,while many benefits accrue only in the future
C) Because in most developing countries the funding from schools come from private investments
D) Because it can raise a family's status
Q2) What can school managers do to improve the educational services that they provide?
A) Allocate teaching time across different subjects
B) Decide what effort to expend in preparing lesson plans
C) Improve training and mentoring programs teachers receive
D) Deciding how frequently to report to work
Q3) Which of the following is not a Proximate Goal?
A) Increasing the number of children who start school
B) Improve the lives of current students when they become adults
C) Increase the number of years children complete before leaving school
D) Increase the value of children learn while in school
Q4) What are the potential benefits and costs of eliminating school fees?
Page 21
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Chapter 20: Agricultural Research and Extension
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Sample Questions
Q1) Which three groups are crucial to putting technical change in agriculture into practice?
A) Managers,laborers,and farmers
B) Agricultural researchers,extension agents,and end users
C) Farmers,bankers,and government bureaucrats
D) Managers of agricultural research institutions,large corporations,and small businesses
Q2) Which of the following is not considered an up-front cost of adopting a new technology?
A) The cost of purchasing or constructing capital structures
B) The cost of learning
C) Fees for extension services
D) Labor costs for utilizing the new technology
Q3) As a farm's access to crop insurance ________ the ______any additional risk will deter adoption of a new technology.
A) Increase; more
B) Increase; less
C) Decrease; probability will remain the same that
D) Decrease; less
Q4) What are some rationales for government intervention in agricultural research?
Page 22
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Chapter 21: Microfinance
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Sample Questions
Q1) Microfinance programs were first created by Nobel prize winning economist Muhamed Yunus in what decade?
A) 1950's
B) 1960's
C) 1970's
D) 1990's
Q2) What does it mean for a microfinance institution (MFI)to be financially sustainable?
A) It has earned a large enough grant to operate without interest and fees from loans
B) Its revenue from interest and fees exceeds its operating costs
C) Donors have guaranteed the funds will remain available
D) It has earned the funds through commercialization
Q3) Microfinance loans can be as small as_____ on interest free loans for beggars and have been reported to be as high as_____ in Mexico?
A) $100; $20,000
B) $100; $5,000
C) $1.00; $1000
D) $3.00; $7,000
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Chapter 22: Public Health, Health Care and Health Insurance
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Q1) In __________,program employees manage and provide both health insurance and health care services.Such programs provide subsidies for health insurance and health care in _________ fashion,through the direct provision of low-cost health care.
A) Fully integrated programs; supply-side
B) Partially integrated programs; demand -side
C) Decentralized programs; supply-side
D) Healthcare management programs; demand-side
Q2) A person's health stock is:
A) Potential for health at the start of the year
B) Determined by genetics
C) Determined by lifestyle choices
D) All of the above
Q3) The local climate,pollution levels,prevalence of communicable disease and any other factors outside her control that influence the likelihood of illness or injury are called:
A) Health inputs
B) Health environment
C) Health behavior
D) Health shock
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