Political Economy of Development
Pre-Test Questions
Course Introduction
The Political Economy of Development explores the complex interactions between politics and economics in shaping development outcomes across different countries and regions. This course examines the roles of institutions, state policies, social structures, and global forces in influencing economic growth, poverty, and inequality. Students will analyze theoretical perspectives and empirical case studies to understand how power dynamics, governance, corruption, and international relations impact development trajectories. Through comparative analysis, the course also discusses policy interventions and sustainable strategies aimed at fostering inclusive and equitable development.
Recommended Textbook
Development Economics Theory Empirical Research and Policy Analysis 1st Edition by Julie
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Page 2
Schaffner
Chapter 1: What Is Development Economics Good for
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Sample Questions
Q1) If we were to employ a poverty threshold of $10 per day rather than $2 per day,what would happen to the number of poor people in the world?
A) increase
B) decrease
C) stay the same
D) <u>all possible</u>
Answer: A
Q2) What is the official poverty threshold in the United States?
A) $1 per person per day
B) $2 per person per day
C) $13 per person per day
D) $100 per person per day
Answer: C
Q3) The Public Sector refers to all of the following except:
A) governments
B) NGOs
C) any development actor
D) private market transactions
Answer: D
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Page 3
Chapter 2: Well-Being
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Sample Questions
Q1) To identify the features of life circumstances that matter to developing country households,and then to identify the factors that constrain their pursuit of well-being,the author suggests it is useful to describe four sets of activities which are:
A) Increasing wealth,improving life expectancy,decreasing infant mortality and gaining freedom
B) Increasing wealth,fetching fresh water,improving environmental quality and building future through savings
C) Earning Income,gaining access to stable healthcare,Increasing wealth,improving life expectancy
D) Earning income,coping with fluctuations,building future through investment and acquiring goods and services
Answer: D
Q2) What is the normal interest rate charged on a howlats loan?
A) 0%
B) 3.5%
C) 5%
D) 10%
Answer: A
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Page 4
Chapter 3: Economic Growth
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Sample Questions
Q1) If we graph the average product of labor as a function of the quantity of capital employed by a firm operating along its production function,when the technology improves while holding both labor and capital constant,the average product of labor curve is
A) upward sloping
B) shifts upwards
C) downward sloping
D) shifts downwards
Answer: B
Q2) Decreasing 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: B
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5
Chapter 4: Economic Growth Theory in Historical Perspective
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Sample Questions
Q1) According to the Lewis model,workers are paid a wage that is ________ in the subsistence sector.
A) determined in the labor market by labor demand and supply
B) equal to the marginal product of labor
C) fixed by tradition near the subsistence level
D) they do not get paid in terms of wages
Q2) In the Neoclassical growth model,if the saving rate s increases,what will happen to the long-run growth rate of GDP?
A) it increases.
B) it decreases.
C) it stays constant.
D) we cannot determine the long-run growth rate of GDP without more information.
Q3) In the Neoclassical growth model,the steady state equilibrium level of capital per worker is:
A) growing at a constant rate.
B) decreasing
C) constant.
D) we cannot determine it without more information.
Q4) What is the knife-edge problem in the Harrod-Domar Growth Model?
Page 6
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Chapter 5: Poverty,Inequality and Vulnerability
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Q1) Empirical studies show that with economic growth,inequality ________ and absolute poverty ________.
A) decreases; decreases
B) increases; decreases
C) change is unknown; decreases
D) increases; increases
Q2) When the income of the poorest 20 percent of population grow at the same percentage rate as the incomes of the rich,we can conclude that the poor benefit ________ compared to the non-poor in terms of absolute benefits.
A) more than
B) less than
C) the same as D) we cannot compare them
Q3) Which one should the priority of policymakers among economic growth,poverty reduction and inequality reduction?
A) growth.
B) poverty reduction
C) inequality reduction.
D) none of the above,it is complicated.
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Page 7
Chapter 6: Consumption, Time Allocation and Production
Choices
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Sample Questions
Q1) If the prices of food and non-food stay constant and consumers income doubles,what will happen to the budget line?
A) The budget line will stay unchanged.
B) The budget line will shift in toward the origin in a parallel fashion.
C) The budget line will shift out from the origin in a parallel fashion.
D) The budget line will change but we need more information to know how.
Q2) If one worker suppliers more hours of labor when wage increases,we can conclude that ________.
A) the substitution effect is greater than the income effect
B) the income effect is greater than the substitution effect
C) the income effect is the same as the substitution effect
D) this worker is not efficient.
Q3) When labor suppliers choose how much time to allocate to wage labor and to other activities seeking to maximize utility ,their constraint is given by
A) the time constraint S + H T
B) the cash constraint that C wS + M.
C) C + wH wT + M.
D) all of the above.
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) In the Wage labor households model,if there are simultaneous increases in food prices and wages,what will happen to the household's purchasing power?
A) increase
B) decrease
C) not change
D) ambiguous
Q2) Nash sets out axioms describing characteristics that we might reasonably expect to see in bargaining outcomes,when the parties to the bargain are rational.He supposes these axioms are fulfilled and examines their implications.More specifically,Nash suggests that a cooperative bargaining outcome should satisfy what five axioms?
Q3) Which of the following is true about the wage labor households?
A) Wages are their only income.
B) Wage labor households all live in urban areas.
C) Wage labor households earn wages in high-skill work.
D) Wage labor households function simultaneously as both labor suppliers and consumers.
Q4) How can rising incomes reduce gender gaps in consumption?
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9
Chapter 8: Domestic Markets for Goods and Services
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Sample Questions
Q1) If local food supply is highly _________,cash distributions raise local food prices only a little while encouraging significant _______ in local food production.
A) Elastic; decreases
B) Elastic; increases
C) Inelastic; decreases
D) Inelastic; increases
Q2) Firms that specialize in marketing services are called __________ and often benefit from specialization just as producers of tradition goods and services.
A) Wholesalers
B) Transportation specialists
C) Middle-men
D) Market intermediaries
Q3) 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.
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Chapter 9: Labor Markets
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Sample Questions
Q1) As long as labor markets are perfectly competitive and workers are mobile,__________ in the demand for low-skill labor in any one sector or location bring _________ for _________workers.
A) Increases; decreases in prices; unskilled
B) Increases; rising wages; all
C) Increases; rising prices; all
D) Decreases; increased income; skilled
Q2) Rather than implementing _________ where governments provide cash transfers to workers who have recently become unemployed,many developing country governments attempt instead to reduce workers' vulnerability to unemployment through_______________,which require employers to give workers advance notice of firing,to make large lump sum severance payments to workers they dismiss,or to obtain government approval before laying off workers.
A) Underemployment benefits; private institutions
B) Unemployment insurance; job security regulations
C) Job security regulations; unemployment benefits
D) Unemployment insurance; unemployment benefits
Q3) What has empirical research pointed to as the most important determinants of migration decisions? Include four or more conditions that could lead to increased migration.
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Chapter 10: Investment and Financial Markets
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Sample Questions
Q1) Under an insurance contract,an investor pays a fee,called a ___________,to purchase a contract that promised payments,called _________,in specified bad states of the world.
A) Discount rate; payouts
B) Premium; indemnities
C) Insurance rate; indemnities
D) Premium; payouts
Q2) If Susan multiplies by the discount factor once to utility experienced in period 1,twice to utility in period two,and t times to utility experienced t periods into the future.She is said to employ _________ when assessing the value of future consumption and utility.
A) Constant discounting
B) Decreasing discounting
C) Zero discounting
D) Increasing discounting
Q3) A key factor in promoting economic growth is:
A) Eliminating foreign trade
B) Well-functioning financial markets
C) High interest rates
D) Stock market volatility
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Page 12
Chapter 11: International Markets and General Equilibrium
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Sample Questions
Q1) 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
Q2) When the dollar declines in the value against the rupiah,dollars are experiencing ________.
A) depreciation
B) appreciation
C) inflation
D) deflation
Q3) The real exchange rate between two currencies measures:
A) the relative price levels in these two countries.
B) how many units of one currency can be exchanged for one unit of the other currency.
C) how many units of representative baskets of goods and services in one country can be exchanged for one unit of the representative baskets of goods and services in the other country.
D) how much appreciation of one currency against the other currency.
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Chapter 12: Institutions and Cooperation
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Sample Questions
Q1) According to,which statement is true?
A) Thief 1 has a dominant strategy.
B) Thief 1 has a dominant strategy
C) This game can be referred as Prisoners' Dilemma game.
D) All of the above
Q2) People's interactions with each other in market and non-market setting are governed by ________.
A) laws
B) economics
C) institutions
D) history
Q3) Table 12.2 shows an example of:
A) the free rider problem
B) the public good problem
C) tragedy of the Commons
D) efficiency problem
Q4) Why do community-level institutions in developing countries merit close study? Provide three reasons.
Q5) What is the important lesson that the prisoners' dilemma game show us?
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Chapter 13: Policy Governance and Political Economy
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Sample Questions
Q1) The benefits a private decision-maker can appropriate are the:
A) Efficient amount of benefits a policy can bring
B) Benefits at the socially optimal quantity
C) Benefits he can claim for himself and dispose of as he wishes.
D) Benefits a social planner assigns to a participant in a program
Q2) According to figure 13.1 which of the figures depict a household that face perfectly competitive markets to that the Marginal private benefit is just the price.
A) Figure a
B) Figures a and b
C) Figures b and c
D) Figure c
Q3) 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
Q4) Good policy implementation choices require varying combinations of what five key "inputs"?
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15
Chapter 14: Policy Analysis
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Sample Questions
Q1) What is meant by the governance structure of a policy?
A) Involves identifying the decision makers and manager of a policy
B) Is only relevant in the case of a public good
C) Includes program eligibility requirements
D) Includes the nature of all regulations imposed on the benefits from a policy
Q2) Some policies only achieve their objectives indirectly through spillover effects for example:
A) A program provides loans to small business in the hopes that increased labor demand will increase wages for unskilled labor
B) Agricultural research and extension programs who aim to increase the well-being of adopting famers
C) A resulting increase in food prices from a policy mean some poor become worse off as a result of the policy
D) When a cash transfer program increases some incomes of the non-poor.
Q3) What are the fundamental objectives in policy analysis?
Q4) What are the seven questions policy maker use to guide a poly analyst through comprehensive study of a policy's benefits and costs?
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Page 16
Chapter 15: Targeted Transfer Programs
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Sample Questions
Q1) Why might a conditional cash transfer (CCF)program that requires school attendance as the precondition to qualify fail to increase enrollment rates significantly?
A) The conditions may be poorly enforced
B) Enrollment rates may already be high
C) The cash transfers pay is not able to overcome the liquidity constraints of school attendance.
D) All of the above are reasons why a CCF may fail to increase school enrollments
Q2) Why might a government prefer a food transfer over a cash transfer?
A) The cost of a cash transfer is more expensive than a food transfer
B) The cost of providing a food transfer is greater than providing a cash transfer
C) A food transfer increases food consumption by the full amount of the transfer
D) A food transfer may do a better job a preventing leakages to the non-poor
Q3) 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
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Page 17
Chapter 16: Workfare
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Sample Questions
Q1) 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
Q2) According to figure 16.3(a)the workforce program is show as _______,and in figure 16.3(b)the workforce program is shown as ____________?
A) A rightward shift from LD to TD; A rightward shift from LD to TD
B) A leftward shift from TD to LD; A rightward shift from LD to TD
C) A rightward shift from LD to TD; A leftward shift from TD to LD
D) A leftward shift from TD to LD; A leftward shift from TD to LD
Q3) According to figure 16.1 how much can each woman consume if they don't participate in the workfare program?
A) Each woman can consume M
B) Mary can consume at point A; Jane can consume at point B
C) Mary can consume at point A; Jane can consume at point A
D) There is not enough information to tell
Q4) 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) How can an increase in the price of a good introduce intra-household effects?
Q2) In the 1930s,1940s and 1950s many developing countries intervened in agricultural markets in order to _________.
A) Keep food prices down for the poor
B) Keep food prices high to benefit farmers
C) Keep food prices down for urban workers
D) Encourage growth in export businesses
Q3) When governments impose import quotas,they require______.
A) Importers to obtain licenses for importing,and grant only a limited number
B) Exporters to obtain licenses for exporting,and grant only a limited number
C) Consumers to obtain licenses for purchasing goods producing abroad
D) Sellers to obtain licenses for selling imported goods.
Q4) All of the following results of a price increase can lead to an increase in economic growth except?
A) Increases in income among liquidity constrained farmers may allow them to climb out of poverty and invest
B) Profound changes to the distribution of income
C) A significant increase in efficiency improvements
D) Allows the country to take better advantage of their comparative advantage
Q5) How can increasing the export tax rate may even cause tax revenue to fall?
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Chapter 18: Infrastructure Policies and Programs
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Sample Questions
Q1) Infrastructure assets contribute to development not merely by existing,but by generating infrastructure services,such as:
A) Transportation of goods and people
B) Provision of clean water and
C) the flow of electricity
D) All of the above are examples of infrastructure services
Q2) All of the following have been discussed as potential rationales for intervention except:
A) Public goods problems
B) Liquidity constraints
C) externalities
D) Economies of scale problems
Q3) What is administrative targeting?
A) Involves the use of means tests or categorical restrictions
B) Involves offering different levels of quality
C) Involves different prices for different quantities
D) By far the most common approach for getting subsidies to the poor
Q4) Describe how switching from using substitute services to new infrastructure may improve well-being? (Include at least three new infrastructure services)
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Chapter 19: Education
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Sample Questions
Q1) 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
Q2) What is the ultimate goal of governments and NGO's when creating education policies and programs?
A) To draw more children into schools
B) To encourage children to remain in school for longer
C) Increase the value of children are learning in school
D) To Speed development by encouraging investment in human capital
Q3) Policymakers influence some implementation outcomes indirectly through school management choices including all of the following except?
A) Decisions regarding the numbers of teachers needed in each school
B) Textbook choices
C) Hiring,firing,promotion and management of teachers
D) Decisions regarding school fees
Q4) What are the potential benefits and costs of eliminating school fees?
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Chapter 20: Agricultural Research and Extension
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Sample Questions
Q1) Adoption rates of new technologies will tend to ________ for farms when output prices ___________ or when labor and fertilizer costs _______.
A) Increase; decrease; decrease
B) Increase; increase; decrease
C) Decrease; increase; increase
D) Decrease; decrease; decrease
Q2) Which of the following would not be classified as an extension agent?
A) Farmers,when they share knowledge about technologies with their neighbors
B) Any actor who in forms farmers about the use of new technologies
C) Agricultural researcher in a developed country
D) All of the above could be considered an extension agent
Q3) Adoption rates differ among males and females and development programs can ______ gender gaps by:
A) Widen; developing better technologies only for men's crops
B) Widen; developing better technologies for women's cops
C) Shrink; developing better technologies for women's cops
D) Shrink; developing better technologies only for men's crops
Q4) How does the tacit nature of technological knowledge complicate the job of an extension agent?
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Chapter 21: Microfinance
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Sample Questions
Q1) What are some ways that MFI's can increase sustainability without sacrificing outreach or impact?
Q2) The penalty for failing to repay a microfinance loan can be?
A) Jail time
B) Seizure of personal property
C) Denial of access to future microfinance loans
D) There is no penalty for failing to repay a microfinance loan
Q3) Many MFIs aren't able to maintain a high enough degree of profitability to be self sustaining.These MFI's require differing amounts of subsidies and can come in the form of all of the following except:
A) Investors willing to take less than competitive returns
B) Grants to cover non-financial services
C) Obtaining funds in commercial capital markets
D) Ongoing donations to fund the supervising of loans
Q4) A microenterprise is ______.
A) A small family run business
B) Has relatively easy access to capital to finance investments
C) A car rental company offering smaller sized vehicles
D) A small business with at least three employees
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Chapter 22: Public Health, Health Care and Health Insurance
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Q1) The social cost of equipping a household with a health input includes all of the following except:
A) The cost of manufacturing
B) The cost of transporting and distributing it to the household
C) Externalities from consuming the item
D) All of the above are social costs
Q2) Which of the following is a proximate objective of health policy makers?
A) Reduce the physical burden households experience when health shocks strike
B) Reduce the mental burden households experience when health shocks strike
C) Reduce the risk of health shocks
D) All of the above
Q3) If _________ is significant,then even small inconveniences - such as having to walk a kilometer to obtain free immunizations -- may represent _________ barriers to acquisition.
A) Future bias; significant
B) Present bias; insignificant
C) Present bias; significant
D) Health bias; insignificant
Q4) Within developing countries,why is ill health is a greater burden for the poor than the non-poor?
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