econ development 2

Consider an economy with low per capita income. Assume i) whenever per capita income rises above subsistence level, population grows and ii) whenever it falls below subsistence level, population shrinks. Given, i) and ii), a. a poverty trap exists. b. a critical minimum effort increasing per capita income by 1.5% per annum is necessary for development to take place. c. the economy is ready for Rostow's take-off stage. d. none of the above

A

If a country experiences a rapid increase in per-capita income due to discovery of new oil reserves, then it is experiencing: a. growth but not necessarily development. b. development but not growth. c. both growth and development. d. neither growth nor development

A

In constant 1968 lira, real GNP in Turkey increased from L206.1 billion in 1980 to L214.7 billion in 1981. Investment in 1980 totaled L43 billion. What was the value of the ICOR? a. 5. b. 0.176. c. L8.6 billion. d. It cannot be determined from these data

A

The Arthur Lewis model utilizes the assumption that, a. an unlimited supply of labor is available at a fixed wage rate b. supply of labor is a strictly increasing function of wage rate c. labor supply grows at a fixed rate d. disguised unemployment must not exist in the agricultural sector

A

Which of the following would not be considered as an example of industrialization a. Increase in literacy b. Replacement of human with mechanical skills c. Improved economic organization d. Improved extraction and working of raw materials

A

According to the Harrod-Domar model, an increase in growth rates depends on a. Increase in capital-output ratio b. Decrease in capital-output ratio, c. Increase in marginal propensity to consume, d. None of the above

B

If the vicious-cycle-of-poverty hypothesis were true at all levels of per capita income, then a. all economies would develop at the same rate. b. no nation could ever achieve economic development. c. no nation would ever fail to reach the highest level of economic development. d. poverty would not be self-perpetuating.

B

The essence of Engel's law is that as family incomes rise a. the savings rate increases b. the proportion of income spent on food declines c. expenditure on food declines d. proportion of income spent on luxuries declines

B

The idea which suggests that poverty is self-perpetuating because poor nations are unable to save and invest enough to accumulate the capital stock that would help them grow is a. the dependency theory. b. the vicious-circle-of-poverty hypothesis. c. neo-colonialism. d. the under-consumptionist hypothesis

B

According to Kuznets, the identifying characteristic of "modern economic growth" is a. expansion of heavy industry. b. a rapid decline in population growth rates. c. high rates of saving and investment. d. application of science to problems of economic production

C

Balanced growth theories of Ragnar Nurkse advocate a. a steady rate of growth of GNP b. parity between capital stock and labor c. simultaneous development of all sectors of the economy d. all of the above

C

Critical minimum effort refers to a. the minimum labor input required to raise the MPl b. the ideal ratio in which to combine labor with capital c. the big push advocated to raise an economy from continued stagnation d. none of the above

C

Industry faces an elastic supply curve of labor because the marginal product of labor in agriculture is a. lower than its marginal product in industry b. less than the average product in agriculture c. very low or zero d. constant at all levels of agricultural output

C

The production possibility frontier can be considered a measure of a. Real G.N.P. b. Nominal G.N.P. c. Potential G.N.P. d. None of the above

C

Underemployment is a situation where a. people who are willing to work are unable to find jobs b. many people in the labor force hold two or more jobs c. people are working full-time and hard, yet have a low marginal product d. people work in a free labor market with a very low wage

C

If 's' is the savings rate and 'v' the capital-output ratio, then 'g' the rate of growth in the Harrod Domar model is represented by a. v/s. b. sv. c. sv. d. s/v.

D

In the Harrod-Domar model, it is assumed that the elasticity of substitution between capital and labor is a. Infinite, b. One, c. Between zero and one, d. Zero

D

The Lewis model of the dual economy makes the following assumption(s) a. The rural wage initially remains constant b. Industry makes a profit by employing cheap labor c. Rural wage will rise when industry expands sufficiently d. all of the above e. none of the above

D

The supply curve of labor to industry is horizontal if there is surplus labor in agriculture. The condition occurs as long as: a. the marginal product of labor in agriculture is less than the average product of labor. b. the marginal product of labor in agriculture is less than the marginal product of labor in industry. c. there are diminishing returns to labor in agriculture. d. the marginal product of labor in agriculture is zero

D

Which of the following is not true about agriculture's role in economic development a. Provides labor for non-agricultural sector, b. Provides a market for non-agricultural commodities, c. Source of industrial raw materials, d. None of the above

D