Quantitative Methods in Development Economics
Final Test Solutions
Course Introduction
This course provides an in-depth exploration of the quantitative tools and techniques essential for analyzing economic development issues. Students will learn statistical methods, econometric modeling, and data analysis applied to real-world development challenges such as poverty measurement, policy evaluation, and impact assessment. Emphasis is placed on the use of large cross-sectional and panel data sets, hypothesis testing, causal inference, and the application of software for empirical research. By the end of the course, students will be equipped to critically evaluate development economics literature and design robust quantitative research projects addressing key economic questions in developing countries.
Recommended Textbook
Development Economics Theory Empirical Research and Policy Analysis 1st Edition by Julie Schaffner
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22 Chapters
608 Verified Questions
608 Flashcards
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2
Chapter 1: What Is Development Economics Good for
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Sample Questions
Q1) 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
Q2) According to World Bank classification,many African and Asian countries qualify as ________,while most Latin American countries qualify as ________.
A) High income countries,Middle income countries
B) Low income countries,High income countries
C) Low income countries,Middle income countries
D) Middle income countries,Low income countries
Answer: C
Q3) The term policies can refer to all of the following except:
A) governments
B) strategies
C) programs
D) projects
Answer: A
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Page 3
Chapter 2: Well-Being
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31 Flashcards
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Sample Questions
Q1) 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
Q2) Howlats loans are loans that citizens borrow from:
A) the federal and local government
B) friends,relatives and neighbors
C) the central bank
D) private companies
Answer: B
Q3) Households' well-being levels are determined not only by the assets,but also by the nature and magnitude of their needs.Households' needs depend on all of the following except:
A) the number of dependents
B) the incidence of illness,injury and disability
C) cultural norms
D) households' income
Answer: D
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Chapter 3: Economic Growth
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32 Verified Questions
32 Flashcards
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Sample Questions
Q1) A loaf of bread purchased by your professor would be described as
A) an intermediate good.
B) a final good.
C) a financial good.
D) a used good.
Answer: B
Q2) When the World Bank use the "Atlas" conversion factors in comparing GDP per capita across countries,the developing countries tend to look ____ relative to the developed countries than when the comparison employs PPP exchange rates.
A) poorer
B) richer
C) the same
D) these two methods cannot be compared
Answer: A
Q3) Which of the following may increase labor productivity for a firm?
A) increasing capital per worker
B) improving technology
C) increasing its technical efficiency
D) all of the above
Answer: D
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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 capital-output ratio v is 3 and the depreciation rate d is 5%,what is the required saving rate?
A) 5 percent.
B) 15 percent.
C) 30 percent.
D) 45 percent.
Q2) "Unconditional convergence" indicates
A) poor countries will grow faster than rich countries.
B) rich countries will grow faster than poor countries.
C) poor countries and rich countries will grow at the same growth rate.
D) poor countries will reach a lower level of steady state level of per capita income.
Q3) The Neoclassical growth model assumes:
A) diminishing marginal returns.
B) population is constant.
C) endogenous technological improvement.
D) labor is in surplus.
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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Sample Questions
Q1) If all incomes in an economy were rising,but the incomes of the richest people were rising faster than the incomes of the poorest,this would be a success by the criterion of A) absolute poverty reduction.
B) inequality reduction.
C) both a and b.
D) neither a nor b.
Q2) Empirical studies show that with economic growth,the poorest 20 percent of population gain ________ the average members of the population.
A) more than
B) less than
C) the same as
D) we cannot compare them
Q3) What is involved in constructing a measure of inequality?
Q4) 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.
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) An increase in p will ________ the VMPL schedule and will lead to ________in the quantity of low-skill labor demanded.
A) shift up; an increase
B) shift up; a decrease
C) shift down; an increase
D) shift down; a decrease
Q2) 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.
Q3) An increase in hourly wage will ________ the wage line and will lead to ________in the quantity of low-skill labor demanded.
A) shift up; an increase
B) shift up; a decrease
C) shift down; an increase
D) shift down; a decrease
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) The unitary households is referred so because
A) there is one person in the household.
B) every household is exactly the same.
C) households follow a unitary distribution.
D) it treats an entire household as if it were a unitary decision maker,maximizing a single utility function
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) 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
Q4) How can rising incomes reduce gender gaps in consumption?
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Chapter 8: Domestic Markets for Goods and Services
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Sample Questions
Q1) According to Figure 8.1,if we define LIP as the local import price,EP as the external market price,LEP as the local export price,and AP as the autarky price,which distance represents the transfer costs of purchasing beans from the big city?
A) LIP minus LEP
B) LIP minus AP
C) LIP minus EP
D) LIP minus 0
Q2) The ________ of Jamaica,women who carry agricultural produce to town in baskets on their heads
A) "Higglers"
B) "Wigglers"
C) "Smugglers"
D) "Carriers"
Q3) If a market is in exporting equilibrium,an increase in supply will:
A) Increase local production but leave the local price unchanged
B) Increase local production and the local price
C) Decrease local production and the local price
D) Increase local consumption and decrease the local price
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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) If employers are perfectly competitive profit maximizers then they hire labor until:
A) The VMPL equals the average total cost
B) The VMPL equals the average variable cost
C) The VMPL equals the wage
D) The VMPL is greater than the average fixed cost
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.
Q4) Under which conditions can investments and innovations that lead to the same rate of economic growth make it more likely to channel benefits to low-wage workers than others?
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Chapter 10: Investment and Financial Markets
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Sample Questions
Q1) Consider an investor with a certain income of 20 contemplating an investment project with a 50 percent chance of delivering a "good" return of 40,and a 50 percent chance of delivering a "bad" return of -20.
The investor consumes the sum of her certain income and her investment return in any state.Thus she consumes 20 in either state if she does not invest,and consumes 60 and 0 in the good and bad states if she does invest.Suppose further that her utility function is given by:(10.22) u(c) = c if < 2= 20 +0.4(c-20)if c 20. What is the expected return for this project? What type f utility function are theses?
Q2) 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
Q3) 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) Suppose Indonesia is a shoe exporter,then in the graph for Indonesian market for shoes,the Local Export Price (LEP)is ________ the autarky price.
A) above
B) below
C) equal to
D) they cannot be compared without more information.
Q2) When purchasing power parity holds,it implies that the real exchange rate equal to
A) 1
B) 0
C) 100
D) nominal exchange rate.
Q3) Which of the following would be an exchange rate?
A) one dollar can be exchanged for four quarters.
B) one dollar can be exchanged for one candy bar.
C) one dollar can be exchanged for 100 yens.
D) one textbook can be exchanged for 10 large pizzas.
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Page 13
Chapter 12: Institutions and Cooperation
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Sample Questions
Q1) Refer to table 12.2,suppose that two people,Fisher 1 and Fisher 2,have access to a fishing ground,and that each may choose to harvest fish in either a restrained or unrestrained fashion.What is the Nash equilibrium?
A) Fisher 1 and Fisher 2 both choose: no restraint
B) Fisher 1 and Fisher 2 both choose: restraint
C) Fisher 1 chooses restraint and Fisher 2 chooses no restraint
D) Fisher 1 chooses no restraint and Fisher 2 chooses restraint
Q2) In a two player non-cooperative game where both players have a dominant strategy,
A) there is never a Nash equilibrium.
B) there can be multiple Nash equilibria.
C) there is only one Nash equilibrium.
D) the actual outcome is unpredictable.
Q3) Why do community-level institutions in developing countries merit close study? Provide three reasons.
Q4) 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
Page 14
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Chapter 13: Policy Governance and Political Economy
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Sample Questions
Q1) The marginal social cost (MSC)is:
A) The private cost of producing one more unit
B) The benefit from producing one more unit
C) Total cost to society from producing one more unit
D) The reduction in the decision makers living standards when one more unit is produced
Q2) Positive externalities imply _________by others,that private actors cannot appropriate,and result in a tendency for private actors to undertake _______ of the activity.
A) Costs experienced; too much
B) Benefits enjoyed; too much
C) Benefits enjoyed; too little
D) Costs experienced; too little
Q3) How can agents be held accountable for their choices and under what conditions will various schemes work to ensure feasible accountability?
Q4) 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
Page 15
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Chapter 14: Policy Analysis
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Sample Questions
Q1) All of the changes in living conditions experienced by anyone in society as a result of a policies introduction are called__________.
A) Social benefit
B) Impacts
C) Social costs
D) Policy value
Q2) 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
Q3) Policies often look different on the ground than they do on paper to gain a better understanding of the true implications of a policy analysts look to the policy's
A) De facto design details
B) Implementation outcomes
C) The paper policy just requires more detailed study
D) Efficiency outcomes
Q4) What are the fundamental objectives in policy analysis?
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Chapter 15: Targeted Transfer Programs
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Sample Questions
Q1) 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
Q2) When a transfer program strengthens incentives towards behaviors that are rewarded by eligibility,they induce incentive effects.Give two examples of an intended behavior incentive effect and at least one example of an unintended incentive.
Q3) Eligibility rules can include all of the following except:
A) Means testing
B) Proxy means tests
C) Poverty score cards
D) Target lifestyles
Q4) Official transfer sizes are a measure of a transfer program's _______?
A) Marginal cost
B) Impact on the poor
C) Availability
D) Generosity
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17
Chapter 16: Workfare
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Sample Questions
Q1) According to figure 16.2 in each panel the potential participant faces a fixed participation cost.Mary faces a fixed monetary cost such as _________ and Jane faces a fixed time cost such as _____________.
A) The cost of buying a bus ticket; the time it takes to walk to work
B) The cost of tools; time spent at workfare job
C) Time on the bus to work; Tools needed for the job
D) Explicit monetary payment for getting the higher paying job; leisure time given up in exchange for work hours
Q2) In order for a workfare program to be self targeting,it must offer a ______ wage than the alternative wage available to poor households and a ________wage than the alternative wage available to wealthier households?
A) Higher; lower
B) Higher; higher
C) Lower; lower
D) Lower; higher
Q3) Under what conditions can workforce programs reduce vulnerability for workers?
Q4) Why do emergency employment programs get criticized for creating infrastructure of low quality or duration?
Q5) Discuss the cost and benefits or raising a program wage.
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Chapter 17: Agricultural Market Interactions and Reforms
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Sample Questions
Q1) 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
Q2) 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.
Q3) Pan-territorial pricing encourages a shift in the geographic distribution of export crop production from _______ to ________ remote locations and a redistribution of income from _____ remote to ______ remote producers.
A) More; less; less; more
B) More; less; more; less
C) Less; more; less; more
D) Less; more; more; less
Q4) 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) Subsidies are:
A) Equal to expenditures less any revenue gathered by charging fees or requiring contributions
B) Equal to the total costs of investment operation and maintenance
C) Equal to the total costs of investment operation and maintenance plus fees charged for use
D) The cost of advertising the new services offered
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) 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
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Page 20
Chapter 19: Education
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Sample Questions
Q1) When does the efficiency of with which educational services are implemented increase?
A) When tuition rises
B) When the cost of providing a given set of educational opportunities falls
C) When the indirect costs of educational services are maximized
D) When subsidies to the school decrease
Q2) What is the different between Gross and Net Enrollment rates (GERs and NERs)?
A) The GER will tend to understand the true enrollment rates
B) The NER will tend to overstate the enrollment rates
C) The NER is calculated by taking the number of students/ the class seating capacity
D) The NER takes into account students' age.
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) Why should government bureaucrats want to transfer authority over school management to school management committees?
Q5) 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) A farmer who anticipates chronic short-term liquidity constraints would,therefore,be ______ likely to adopt a technology that ___________ annual planting season input and financing requirements
A) more; leaves unchanged
B) more; raises
C) less; decreases
D) less; raises
Q2) Several studies have confirmed that as the time and effort needed to adopt new technology_________ farmers tend to ________,undertaking less experimentation of their own?
A) Increases; under-adopt
B) Increases; free-ride
C) Decreases; over-adopt
D) Decreases; under-adopt
Q3) 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
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) 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
Q2) What is the primary benefit of using microfinance for business investment?
A) Status
B) Higher current income
C) To find opportunities to start new businesses
D) Future business profits
Q3) Why is microcredit considered by many to be effective and self targeted tool for reducing poverty?
A) Low income earners are liquidity constrained
B) High income earners are not likely to be liquidity constrained
C) High income earners are unlikely to find the high interest rates attractive
D) All of the above are correct.
Q4) What are some ways that MFI's can increase sustainability without sacrificing outreach or impact?
Page 23
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Chapter 22: Public Health, Health Care and Health Insurance
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Sample Questions
Q1) How is the DALYs lost to a disease in a given year calculated?
Q2) In which countries is healthcare spending as a percentage of GDP the highest?
A) Low and middle income countries
B) High income countries
C) Neither spend a significant amount on healthcare when compared to the GDP
D) All groups spend about the same on healthcare
Q3) 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
Q4) If each of 2,000 individuals face a 3% chance of requiring a surgery that costs $40,000 then an insurance company would expect to pay for ____________ surgeries (on average)per year that would cost __________,and would charge premiums of__________.
A) 100; $4,000,000; $2,000
B) 30; $1,200,000; $600
C) 60; $2,400,000; $1,200
D) 200;$8,000,000; $4,000
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