Final Exam: Multiple Choice

A9 4. Which one of the following is correct about the experience of Egypt's textile industry? (check all that apply, three correct answers.) a) A significant portion of exports are sent to lead international firms in ready-made garments, thus, the industry benefits from the expertise of these firms in management and marketing. b) The industry is buyer-driven and linked to global markets. c) The industry's connection to global markets provides the opportunity for firms to learn from outside and to transfer technology into Egypt. d) All the materials used in the industry is made in Egypt.

a) A significant portion of exports are sent to lead international firms in ready-made garments, thus, the industry benefits from the expertise of these firms in management and marketing. b) The industry is buyer-driven and linked to global markets. c) The industry's connection to global markets provides the opportunity for firms to learn from outside and to transfer technology into Egypt.

A16 1. (Devlin, Chapter 4) Which one is correct about the theories in oil market? (check all that apply, three correct answers.) a) According to the replacement cost theory, prices will decrease in the long run because they reflect the cost of maintaining and expanding the inventories, and these costs are decreasing due to technological advances. b) According to the Hotelling theory, the long run competitive price must increase because of inherent growing scarcity. c) The fixed supply of oil means that the market is a monopolistic market and the suppliers will charge the price that they desire. d) There are precautionary and speculative demands in the oil market on top of the existing demand, leading to high price episodes.

a) According to the replacement cost theory, prices will decrease in the long run because they reflect the cost of maintaining and expanding the inventories, and these costs are decreasing due to technological advances. b) According to the Hotelling theory, the long run competitive price must increase because of inherent growing scarcity. d) There are precautionary and speculative demands in the oil market on top of the existing demand, leading to high price episodes.

A25 (on final review) 1. (World Bank-Better governance) Which one of the following is correct about the two values of good governance: inclusiveness and accountability? (check all that apply, three correct answers.) a) Accountability is based on the notion of representation and means those selected to act in the name of the people are answerable to the people for their failure and are credited for their successes. b) Inclusiveness, which is based on the notion of equality, is enshrined in every constitution, thus all countries provide them for their citizens as a constitutional right. c) Inclusiveness is based on the notion of equality, which means all those who have a stake in the governance process and want to participate in them can do so on a basis equal to all others. d) Separating powers inside government and setting up checks and balances are examples of internal accountability.

a) Accountability is based on the notion of representation and means those selected to act in the name of the people are answerable to the people for their failure and are credited for their successes. c) Inclusiveness is based on the notion of equality, which means all those who have a stake in the governance process and want to participate in them can do so on a basis equal to all others. d) Separating powers inside government and setting up checks and balances are examples of internal accountability.

A3: 4. Which one is correct about the Solow Model? (check all that apply, two correct answers.) a) An important implication of the model is that growth should be higher in poor economics than rich countries because, in poor countries where the initial level of capital intensity is low, the marginal product of capital is high (the convergence theory). b) A key feature of the Solow model is that average capital productivity decreases as capital increases. c) It assumes that the marginal product of capital is constant. d) At the steady state of the model, capital intensity increases by the following factors: saving rate, total factor productivity, population, and depreciation rate.

a) An important implication of the model is that growth should be higher in poor economics than rich countries because, in poor countries where the initial level of capital intensity is low, the marginal product of capital is high (the convergence theory). b) A key feature of the Solow model is that average capital productivity decreases as capital increases.

A6: 4. Which one of the following was among the policies adopted by newly independent states after the WWII? (check all that apply, three correct answers.) a) Construction of physical infrastructures. b) Nationalization of private activities and extension of government control over increasing areas of market activities. c) Commitment to providing access to health, education, employment, as well as basic food items and energy. d) Improvement in institutions that promoted competitive market activities.

a) Construction of physical infrastructures. b) Nationalization of private activities and extension of government control over increasing areas of market activities. c) Commitment to providing access to health, education, employment, as well as basic food items and energy.

A24 3. Which one of the following areas is among the "areas" that experienced the most reform attempts? (Check all that apply, two correct answers) a) Dealing with construction permits b) Closing a business c) Getting credit d) Starting a business

a) Dealing with construction permits d) Starting a business

A21 1. Which one is correct about the human development factors in the MENA region that distinguish this region from the rest of the developing world? (check all that apply, two correct answers.) a) Demographic factors such as delayed fertility transition and rapid growth of the young population that leads to an imbalance in the job market. b) High income from oil which drives a wedge between individual productivity and consumption. c) Religious and cultural factors that limit the improvement in human development. d) Intervention from the world powers changed the political institutions.

a) Demographic factors such as delayed fertility transition and rapid growth of the young population that leads to an imbalance in the job market. b) High income from oil which drives a wedge between individual productivity and consumption.

A24 1. Which one is correct about the Doing Business? (Check all that apply, two correct answers) a) Doing Business encompasses the data from readings of laws and regulations, as well as time and motion indicators that measure the efficiency in achieving a regulatory goal. b) Doing Business covers the strength of the financial system and financial regulations as important factors in understanding some of the underlying causes of the global financial crisis. c) Doing Business's goal is to provide an objective basis for understanding and improving the regulatory environment for businesses. d) Doing Business measures all aspects of the business environment that matters for firms or investors including security, macroeconomics, stability, and corruption.

a) Doing Business encompasses the data from readings of laws and regulations, as well as time and motion indicators that measure the efficiency in achieving a regulatory goal. c) Doing Business's goal is to provide an objective basis for understanding and improving the regulatory environment for businesses.

A17 1. Which one is among the theories that explain the negative effect of resources on economic growth? (Check all that apply, three correct answers) a) Dutch disease. b)Excessive borrowing. c) Volatility of resource money. d) Inflation.

a) Dutch disease. b)Excessive borrowing. c) Volatility of resource money.

A19 5. (2003 paper) Which one is among the education effect of women in MENA countries? (check all that apply, three correct answers.) a) Education is the single most important determinant of both age at marriage and age at first birth in MENA countries. b) Most of the MENA women who work outside the agricultural sector are college-educated professionals employed mainly in government. c) Educated women are less likely to stay out of the labor market because they are usually from more affluent families. d) Educated women generally want smaller families and make better use of reproductive health and family planning information and services in achieving their desired family size.

a) Education is the single most important determinant of both age at marriage and age at first birth in MENA countries. b) Most of the MENA women who work outside the agricultural sector are college-educated professionals employed mainly in government. d) Educated women generally want smaller families and make better use of reproductive health and family planning information and services in achieving their desired family size.

A24 5. Which one of the following is the area in which NONE of the Arab countries conducted any reforms to make doing business easier, according to Figure 1.2? (One correct answer) a) Employing workers b)Paying taxes c) Protecting investors d) Getting credit

a) Employing workers

A3: 5. Which one is correct about the endogenous growth theory? (check all that apply, three correct answers.) a) Endogenous growth theory is based on the production of knowledge, which can grow boundlessly. b) Romer model, which is an endogenous growth model, assumes that Total Factor Productivity (At) can increase over time. c) Growth in endogenous models, like growth in the Solow model, is limited. d) Romer model explains the possible divergence between poor and rich countries by the accumulation of knowledge.

a) Endogenous growth theory is based on the production of knowledge, which can grow boundlessly. b) Romer model, which is an endogenous growth model, assumes that Total Factor Productivity (At) can increase over time. d) Romer model explains the possible divergence between poor and rich countries by the accumulation of knowledge.

A6: 5. Which one was among the development policies Egypt followed under Gamal Abdel Nasser? (check all that apply, two correct answers.) a) Extensive land reform to reduce the size of large landholdings and redistribution of lands among people in rural areas. b) Privatization of Suez Canal that was controlled by Britain. c) Initialization of large-scale infrastructure projects such as the construction of Aswan Dam. d) Establishment of the market price system in factor markets and commodity markets.

a) Extensive land reform to reduce the size of large landholdings and redistribution of lands among people in rural areas. c) Initialization of large-scale infrastructure projects such as the construction of Aswan Dam

A25 5. Which one of the following is among the challenges of bridging the MENA region's governance gap? (check all that apply, three correct answers.) a) External factors such as oil money, conflicts, and interference not only handicap the emergence of good institutions but also reinforce behaviors that defy accountability. b) The biggest challenge is choosing the right leader and prescribing the right economic and social policies. c) There is no unique solution to problems of governance and solutions are usually time-consuming. d) Better governance is not the sole responsibility of governments; it requires more active participation by the people.

a) External factors such as oil money, conflicts, and interference not only handicap the emergence of good institutions but also reinforce behaviors that defy accountability. c) There is no unique solution to problems of governance and solutions are usually time-consuming. d) Better governance is not the sole responsibility of governments; it requires more active participation by the people.

A13 1. Which one is correct about the growth of FDI in the Arab countries compared to the world and developing countries, from 1985 to 1995? (Check all that apply, two correct answers.) a) FDI in the Arab world fell behind both developing countries and the world. b) Growth in global FDI is much higher than growth in developing countries, indicating that most FDI happens between developed countries. c) FDI in Arab countries did not grow during this period, due to the economic recession. d) FDI in developing countries grew faster than both the world and the Arab countries.

a) FDI in the Arab world fell behind both developing countries and the world. b) Growth in global FDI is much higher than growth in developing countries, indicating that most FDI happens between developed countries.

A22 5. Which one of the following is correct about social transfers through family networks and NGOs in MENA countries? (check all that apply, three correct answers.) a) Family-based supports play a crucial role in providing social protection. b) Islamic forms of wealth tax, called zakat, provides a major source of social protection in specific times of the years such as the holy month of Ramadan. c) The share of elderly living with their children is considerably higher in MENA compared OECD countries. d) Social changes in family structure, urbanization, employment, and education has strengthened the ties among broad family members and their support of each other.

a) Family-based supports play a crucial role in providing social protection. b) Islamic forms of wealth tax, called zakat, provides a major source of social protection in specific times of the years such as the holy month of Ramadan. c) The share of elderly living with their children is considerably higher in MENA compared OECD countries.

A9 1. (Devlin, Chapter 9) Which one is correct about the theory of technology transfer? (check all that apply, two correct answers.) a) Foreign direct investment and direct trade in knowledge through technology licensing are among the other channels of technology transfer. b) Because technology can be imported, the economic structure of a country does not matter for technology transfer. c) Import of advanced machines is the main channel of technology transfer. d) Trade with industrial countries enables developing countries to lower their technological gap at a faster rate.

a) Foreign direct investment and direct trade in knowledge through technology licensing are among the other channels of technology transfer. d) Trade with industrial countries enables developing countries to lower their technological gap at a faster rate.

A2: 1. (Kamrava, 2013, Chapter 2) Which one is correct about the "three new sets of players" in the process of state formation in MENA after the World War I? (Check all that apply, three correct answers.) a) France and Britain agreed that France would retain a free hand in Morocco in exchange for giving Britain a free hand in Egypt. b) Britain's main goal was to make sure that India is safe, thus, its plan was to hold control over the Suez Canal. c) France and Britain entered new agreements with Ottomans to protect the interests of Christians living in the region. d) A new set of leaders such as Kamal Ataturk in Turkey and Reza Pahlavi in Iran came to power with a promise to modernize their societies and end the domination of European powers.

a) France and Britain agreed that France would retain a free hand in Morocco in exchange for giving Britain a free hand in Egypt. b) Britain's main goal was to make sure that India is safe, thus, its plan was to hold control over the Suez Canal. d) A new set of leaders such as Kamal Ataturk in Turkey and Reza Pahlavi in Iran came to power with a promise to modernize their societies and end the domination of European powers.

A3: 2. Which one is correct about growth accounting? (check all that apply, two correct answers.) a) Growth accounting is the percentage of an economy's growth rate that we can explain using the growth rate of the labor force, the growth rate of capital stock, and residual factors. b) The residual factors are not important in growth accounting and should be ignored. c) The amount of capital and labor force determine the share of each of these two factors in the growth rate of national output. d) The growth rate of capital multiplied by the weight of capital in production determines the share of capital in economic growth.

a) Growth accounting is the percentage of an economy's growth rate that we can explain using the growth rate of the labor force, the growth rate of capital stock, and residual factors. d) The growth rate of capital multiplied by the weight of capital in production determines the share of capital in economic growth.

A22 (on final review sheet) 2. Which one is correct about the characteristics of poor people in the MENA region? (check all that apply, two correct answers.) a) Households with disabled members, caused by birth-related factors, communicable and chronic diseases, weak access to health services and violence, are among the vulnerable groups. b) Poverty is linked to asset ownership, thus in rural areas poverty incidence is higher among small landowners. c) Poor in MENA are mostly located in urban areas working in the informal low wage services. d) Similar to developed countries, poverty is concentrated among female-headed households.

a) Households with disabled members, caused by birth-related factors, communicable and chronic diseases, weak access to health services and violence, are among the vulnerable groups. b) Poverty is linked to asset ownership, thus in rural areas poverty incidence is higher among small landowners.

A3: 1. (Roland, 2014, Chapter 4 - Pages 84-101) Which one is correct about factors of production? (check all that apply, two correct answers.) a) In highly developed countries, capital is usually more abundant than labor, and in poor economies, labor is more abundant. b) An increase in labor will result in the same amount of extra output in all types of industries. c) Factors of production are fundamental determinants of output. d) Labor, capital, raw materials, and energy used in the production process are factors of production.

a) In highly developed countries, capital usually more abundant than labor, and in poor economies, labor is more abundant. c) Factors of production are fundamental determinants of output

A25 3. The overall governance gap has two components: an index of the quality of administration in the public sector and an index of public accountability. Which one is correct about these two measures in MENA? (check all that apply, two correct answers.) a) In the index of public accountability, the region falls far short compared to other regions of the world. b) The gap with the world average in the index of public accountability decreases by income. c) The gap in administration quality, compared to the rest of the world, is higher for high-income countries in MENA, which are mostly oil exporters. d) In the index of quality of administration, MENA is much worse than other regions.

a) In the index of public accountability, the region falls far short compared to other regions of the world. c) The gap in administration quality, compared to the rest of the world, is higher for high-income countries in MENA, which are mostly oil exporters.

A12 4. Which one of the following explains the dominance of non-participatory transactions in Islamic Banking and Finance? (check all that apply, three correct answers.) a) In the presence of asymmetric information, it is likely that investors misuse loaned funds or utilize them in inappropriate ways (the problem of moral hazard). b) In the presence of asymmetric information, it is likely that only poor credit investors come forward for participatory transactions with banks (the problem of adverse selection). c) Because of asymmetric information between parties, debt contracts (interest-based financing) is superior to equity financing (risk-sharing). d) Western societies have resolved all the asymmetric information issues and adopted participatory transactions, whereas, in Islamic Banking, the asymmetric information is deeply related to the Islamic law and cannot be resolved.

a) In the presence of asymmetric information, it is likely that investors misuse loaned funds or utilize them in inappropriate ways (the problem of moral hazard). b) In the presence of asymmetric information, it is likely that only poor credit investors come forward for participatory transactions with banks (the problem of adverse selection). c) Because of asymmetric information between parties, debt contracts (interest-based financing) is superior to equity financing (risk-sharing).

A25 4. Which one of the following is among the ways the improvement in inclusiveness and accountability helps improve the economic situation? (check all that apply, three correct answers.) a) Inclusiveness and accountability decrease the probability of arbitrary or distorted policies. b) Better governance makes it easier to start new businesses and to run and expand existing ones. c) Better governance increases the flexibility of countries to respond to economic shocks. d) Better governance decreases the possibility of external conflicts such as wars and internal conflicts such as civil wars.

a) Inclusiveness and accountability decrease the probability of arbitrary or distorted policies. b) Better governance makes it easier to start new businesses and to run and expand existing ones. c) Better governance increases the flexibility of countries to respond to economic shocks.

A5: 4. Which one of the following was among the economic policies adopted by most Arab countries? (check all that apply, three correct answers.) a) Increasing share of the public sector in employment. b) Five-year plans to boost certain domestic industries. c) Support of private sectors that could generate foreign currencies. d) Import substitution industrialization.

a) Increasing share of the public sector in employment. b) Five-year plans to boost certain domestic industries. d) Import substitution industrialization.

A4: 2. Which one is correct about stylized facts of economic growth? (check all that apply, two correct answers.) a) Industrialization and manufactured exports have been the most reliable levers of rapid growth. b) Economic growth has declined over time. c) Successful economic growth has been possible only when there was no government intervention in the economy. d) Convergence in economic prosperity has been an exception, not a rule.

a) Industrialization and manufactured exports have been the most reliable levers of rapid growth. d) Convergence in economic prosperity has been an exception, not a rule.

A12 1. (Khan, 2010) There are opposing theories about the existence of Islamic Bank and Finance. Which one of the following is among these theories? (check all that apply, three correct answers.) a) Islamic Bank and Finance was primarily a vehicle for reasserting the primacy of Islam and secondary a vehicle for economic changes. b) Islamic Bank and Finance appears similar to conventional banking and finance, simply because it is in the transition phase. c) Islamic Bank and Finance is merely a change of terminology, without any de facto difference. d) Islamic Bank and Finance has reached its maturity and is a powerful alternative to the Western banking system.

a) Islamic Bank and Finance was primarily a vehicle for reasserting the primacy of Islam and secondary a vehicle for economic changes. b) Islamic Bank and Finance appears similar to conventional banking and finance, simply because it is in the transition phase. c) Islamic Bank and Finance is merely a change of terminology, without any de facto difference.

A21 4. Which one of the following is correct about gender inequality in the MENA region? (check all that apply, two correct answers.) a) MENA education has expanded faster than other regions (with exception of East Asia), especially for women who in recent years have overtaken men. b) School enrollment rates at the primary and secondary levels for men and women are similar. c) Gender inequality index in MENA countries is, in general, better than middle-income countries and close to high-income countries. d) Due to the fast increase in women's education, the participation rate of women has greatly increased and currently is similar to other middle-income countries.

a) MENA education has expanded faster than other regions (with exception of East Asia), especially for women who in recent years have overtaken men. b) School enrollment rates at the primary and secondary levels for men and women are similar.

A23 1. (Adams and Page, 2003) Table 1 describes the poverty, inequality, and growth by region. Which one of the following is correct, according to this table? (check all that apply, two correct answers.) a) MENA region had a lower poverty rate (measured by poverty headcounts based on $1.08 per person per day) than any other region except Europe and Central Asia. b) Poverty and inequality in MENA worsened from the 1980s to 1990s. c) Global poverty and inequality worsened from the 1980s to 1990s. d) Inequality (measured by Gini coefficient) in MENA was worse than any other region except Europe and Central Asia and South Asia.

a) MENA region had a lower poverty rate (measured by poverty headcounts based on $1.08 per person per day) than any other region except Europe and Central Asia. c) Global poverty and inequality worsened from the 1980s to 1990s.

A18 4. Which one of the following is correct about the role of labor in production in the MENA region and businesses' behavior in the labor market? (check all that apply, three correct answers.) a) Majority of private informal businesses are operated as family businesses with little access to formal credits, limiting growth capacities. b)Employers prefer to hire new workers instead of keeping the old ones, and prefer to hire workers permanently rather than temporarily. c) Restrictions on hiring, firing, and wage are widespread and create extensive rigidities. d) Because of a high degree of fixity in the labor market, firms' decisions in hiring workers are more sensitive to long-term factors rather than short-term fluctuations (labor is a quasi-fixed factor).

a) Majority of private informal businesses are operated as family businesses with little access to formal credits, limiting growth capacities. c) Restrictions on hiring, firing, and wage are widespread and create extensive rigidities. d) Because of a high degree of fixity in the labor market, firms' decisions in hiring workers are more sensitive to long-term factors rather than short-term fluctuations (labor is a quasi-fixed factor).

A19 4. (2003 paper) Which one is among the explanations for the low participation rate of women in the labor market? (check all that apply, three correct answers.) a) Men in the MENA region are more likely to have direct access to wage employment and control over wealth, while women are largely economically dependent upon male family members. b) Even though gender discrimination in the MENA region is strongly banned by laws, social norms and traditions decrease the effectiveness of these laws. c) Women's employment options have been limited to a small number of socially acceptable occupations and professions, such as teaching and medicine. d) In a number of MENA countries, the use of capital intensive technologies that require few workers, along with relatively high wages for men, have precluded women's greater involvement in the labor force.

a) Men in the MENA region are more likely to have direct access to wage employment and control over wealth, while women are largely economically dependent upon male family members. c) Women's employment options have been limited to a small number of socially acceptable occupations and professions, such as teaching and medicine. d) In a number of MENA countries, the use of capital intensive technologies that require few workers, along with relatively high wages for men, have precluded women's greater involvement in the labor force.

A16 5. Which one of the following is correct about oil stabilizing and saving funds? (check all that apply, three correct answers.) a) Most funds require investment in offshore assets to avoid its negative effects on the real exchange rate, but the effects will appear once the fund reserves are used. b) Empirical analyses show that funds have little impact on lessening fiscal volatility but a positive impact on domestic capital investment. c) Stabilization funds cannot stabilize the revenue that goes to governments, they can only stabilize the real exchange rates. d) A fund is the result of a stable fiscal policy, not its cause.

a) Most funds require investment in offshore assets to avoid its negative effects on the real exchange rate, but the effects will appear once the fund reserves are used. b) Empirical analyses show that funds have little impact on lessening fiscal volatility but a positive impact on domestic capital investment. d) A fund is the result of a stable fiscal policy, not its cause.

A13 5. Which one of the following is among the institutional reforms regarding FDI in the region? (Check all that apply, three correct answers.) a) New or revamped investment legislation. b) Relaxed restrictions including on foreign ownership limits. c) Joining into free-trade agreements with other countries. d) Incentives, including tax and custom duty breaks.

a) New or revamped investment legislation. b) Relaxed restrictions including on foreign ownership limits. d) Incentives, including tax and custom duty breaks.

A15 4. Which one of the following is correct about the supply of and/or the demand for liquid fuels, according to Figure 2? (check all that apply, two correct answers.) a) Non-OPEC producers will shift from producing oil to producing biofuels. b) China's demand for oil will grow faster than that of OECD countries. c) OPEC's supply of oil will decline in the future. d) The main force of growth in the demand side is the demand from OECD countries and China.

a) Non-OPEC producers will shift from producing oil to producing biofuels. b) China's demand for oil will grow faster than that of OECD countries.

A10 5. Which one is correct about the economic performance in Iran after the 1979 revolution? (check all that apply, two correct answers.) a) Price control, deliberately overvalued exchange rate, and quantitative regulation of imports were among the policies adopted after the revolution. b) The government has paid vast amounts of subsidies on food, medicine, and energy. c) After the revolution, stat's control over the economy greatly decreased. d) All economic and social indexes, including per capita income, poverty, and educational indexes worsened.

a) Price control, deliberately overvalued exchange rate, and quantitative regulation of imports were among the policies adopted after the revolution. b) The government has paid vast amounts of subsidies on food, medicine, and energy.

A11 5. Which one is correct about the economic activities of religious minorities in the Islamic world? (check all that apply, three correct answers.) a) Prior to the eighteenth century, they mostly exercised their choice of law in favor of Islamic law because of its reliability, its sub advantage for certain groups such as women and for their option to move away from it if needed. b) With the rise of the West, Minorities started using westers legal system to manage their organizations and adopted modern institutions. c) Non-Muslim minorities always followed their own religious rules and had advantages over Muslim majorities. d) By the late nineteenth century, most bankers in the Middle East were either western or non-Muslims operating under western legal systems.

a) Prior to the eighteenth century, they mostly exercised their choice of law in favor of Islamic law because of its reliability, its sub advantage for certain groups such as women and for their option to move away from it if needed. b) With the rise of the West, Minorities started using westers legal system to manage their organizations and adopted modern institutions. d) By the late nineteenth century, most bankers in the Middle East were either western or non-Muslims operating under western legal systems.

A1: 2. Which one is correct about the oil production in the Middle East? (Check all that apply, two correct answers.) a) Production of oil in the region is relatively cheaper compared to other regions of the world. b) The region is the biggest producer and consumer of oil in the world. c) Big private oil producing companies in the Middle East countries are the main sources of stability. d) Since oil revenue accrues mostly to the governments in this region, all types of rent-seeking behavior and non-accountability of government agencies are expected to happen.

a) Production of oil in the region is relatively cheaper compared to other regions of the world. d) Since oil revenue accrues mostly to the governments in this region, all types of rent-seeking behavior and non-accountability of government agencies are expected to happen.

A7: 5. Based on Table 5, explained in the paper, which one is correct about the factors affecting capital growth and total factor productivity growth? (check all that apply, two correct answers.) a) Real exchange rate overvaluation has a strong negative effect on total factor productivity. b)Initial income has a strong positive effect on the growth of capital and productivity. c) Institutional quality positively and significantly affect growth in output, capital accumulation, and productivity. c) Growth in the working population relative to total population growth does not have any effect on capital accumulation.

a) Real exchange rate overvaluation has a strong negative effect on total factor productivity. c) Institutional quality positively and significantly affect growth in output, capital accumulation, and productivity.

A23 3. Which one is correct about poverty and international remittance and government employment, based on Tables 2 and 3, explained in the text? (check all that apply, three correct answers.) a) Remittance as the share of per capita GDP for all countries in the sample, has a negative and significant effect on poverty, using both measures of poverty. b) The effect of remittances and public employment on the Gini coefficient is not significant, indicating that they may improve the life of both poor and non-poor. c) The effect of the interactive variable (MENA dummy variable times remittance) is significant, suggesting that remittances definitely reduce poverty in MENA region. d) Government employment as the share of total employment has a negative and significant effect on poverty, using both measures of poverty, for all countries in the sample, and for MENA countries.

a) Remittance as the share of per capita GDP for all countries in the sample, has a negative and significant effect on poverty, using both measures of poverty. b) The effect of remittances and public employment on the Gini coefficient is not significant, indicating that they may improve the life of both poor and non-poor. c) The effect of the interactive variable (MENA dummy variable times remittance) is significant, suggesting that remittances definitely reduce poverty in MENA region.

A23 2. Which one is correct about factors affecting poverty in the MENA region? (check all that apply, two correct answers.) a) Remittance from oil-rich Persian Gulf countries as well as Western European countries was one of the main factors reducing poverty in poor countries. b) Many MENA governments used public employment as a means of keeping people employed and out of poverty. c) As oil prices increased in the late 1970s, and the economies of the Persian Gulf boomed, poor people from North African countries of Algeria, Morocco, and Tunisia migrated to oil-rich countries, and their remittance improved Northern African economies. d) The main source of decrease in MENA poverty in the 1990s was the fast growth in GDP.

a) Remittance from oil-rich Persian Gulf countries as well as Western European countries was one of the main factors reducing poverty in poor countries. b) Many MENA governments used public employment as a means of keeping people employed and out of poverty.

A16 3. Which one is among the characteristics of oil wealth in relation to development? (check all that apply, two correct answers.) a) Since governments in MENA own the oil reserves, the impact of oil depends almost entirely on governments' fiscal policies. b) Production of oil employs a huge amount of production factors, particularly labor, and this helps boost the economy. c) Oil causes real depreciation of exchange rate and improves the competitiveness of the other sectors. d) Governments in MENA own the resources, so the revenue accrues to central governments.

a) Since governments in MENA own the oil reserves, the impact of oil depends almost entirely on governments' fiscal policies. d) Governments in MENA own the resources, so the revenue accrues to central governments.

A7: 3. Decomposition of growth differential between MENA and East Asia presented in Figure 1 confirms which one of the following? (check all that apply, three correct answers.) a) The effects of different factors vary significantly among three different types of countries in the region. b) Institutional quality is the main factor affecting growth differential among all three types of countries in the region. c) In all countries, except in GCC countries, a big part of the growth differential is due to factors not included in the model, thus remain unexplained. d) Institutional quality, government consumption, and initial income are the most important factors that should be noticed in analyzing the growth differential.

a) The effects of different factors vary significantly among three different types of countries in the region. c) In all countries, except in GCC countries, a big part of the growth differential is due to factors not included in the model, thus remain unexplained. d) Institutional quality, government consumption, and initial income are the most important factors that should be noticed in analyzing the growth differential.

A9 5. Which one is correct about moving from a resource-driven economy to a knowledge-driven economy? (check all that apply, three correct answers.) a) Since innovation is a non-linear and try-and-error process, it is essential to let different parts of societies to interact with each other and with organizations outside the country. b) Resource-driven economies cannot use the resources to move to knowledge-driven economies except by removing the resource money from their economies. c) Resource-driven economies can shift to knowledge-driven economies by developing ties with countries and international firms that provide technology transfer. d) The second stage of moving from a resource-driven economy to a knowledge-based economy includes channeling export revenues into capital investment and raising the productivity of existing industries.

a) Since innovation is a non-linear and try-and-error process, it is essential to let different parts of societies to interact with each other and with organizations outside the country. c) Resource-driven economies can shift to knowledge-driven economies by developing ties with countries and international firms that provide technology transfer. d) The second stage of moving from a resource-driven economy to a knowledge-based economy includes channeling export revenues into capital investment and raising the productivity of existing industries.

A10 3. Which one of the following is correct about the Post-Washington consensus rules suggested by Rodrick? (check all that apply, two correct answers.) a) Social Safety net should be an essential part of reforms. b) Anti-corruption. c) Washington Consensus recommendations should be abolished and new ideas should be implemented. d) Perfect capital-account opening.

a) Social Safety net should be an essential part of reforms. b) Anti-corruption.

A10 1. Which one of the following is correct about the Washington consensus? (check all that apply, two correct answers.) a) Social protection, poverty, and corruption were absent from Washington Consensus rules. b) Washington Consensus recommends huge stimulus plans to boost economic growth. c) Washington Consensus suggests that stabilization of the macroeconomy, not microeconomics changes, is the key to reforms. d) The basic idea is that markets promote growth better than states.

a) Social protection, poverty, and corruption were absent from Washington Consensus rules. d) The basic idea is that markets promote growth better than states.

A19 3. (2001 paper) Which one of the following is correct about countries' involvements in family planning programs? (check all that apply, three correct answers.) a) Some countries in the region, most notably Egypt, Iran, and Turkey were among the first less developed countries to officially support family planning. b) Part of the resistance against family planning program was based on the idea that these programs are pro-west programs aiming at reducing the population of the countries. c) The Cairo Program of Action states that the implementation of family planning recommendations should not be subject to local values and norms. d) Many countries, among them Algeria and Iran, changed their attitude toward family planning multiple times.

a) Some countries in the region, most notably Egypt, Iran, and Turkey were among the first less developed countries to officially support family planning. b) Part of the resistance against family planning program was based on the idea that these programs are pro-west programs aiming at reducing the population of the countries. d) Many countries, among them Algeria and Iran, changed their attitude toward family planning multiple times.

A2: 5. Which one was among the Socio-Economic changes that Ataturk started in New Turkey? (Check all that apply, two correct answers.) a) State's engineering of social change. b) Renewal of the Caliphate (the religious leadership of the Islamic world) c) Promotion of economic development. d) Suppression of Turkish identity.

a) State's engineering of social change c) Promotion of economic development

A7: 2. The results of growth regression confirm that the higher real per capita growth is associated with which of the following? (check all that apply, two correct answers.) a) Stronger institutions. b) Bigger and stronger government. c) Lower exchange rate overvaluation. d) Higher inflation.

a) Stronger institutions c) Lower exchange rate overvaluation

A24 4. Which one of the following is correct about successful reforms in Doing Business? (Check all that apply, three correct answers) a) Successful reforms stay focused, thanks to a long term vision supported by specific goals. b) Successful reforms are inclusive and involve all relevant public agencies and private sector representatives. c) Successful reforms follow a long-term agenda aimed at increasing the competitiveness of firms and the economy. d) Successful reforms focus only on one or two of the areas at a time.

a) Successful reforms stay focused, thanks to a long term vision supported by specific goals. b) Successful reforms are inclusive and involve all relevant public agencies and private sector representatives. c) Successful reforms follow a long-term agenda aimed at increasing the competitiveness of firms and the economy.

A15 2. Which one is among the factors affecting the demand for and/or the supply of oil? (check all that apply, three correct answers.) a) Technological changes. b) Price of oil. c) The rate and distribution of global economic growth. d) Government policies.

a) Technological changes. c) The rate and distribution of global economic growth. d) Government policies.

A11 4. Which one of the following is correct about the Waqf system and its role in the underdevelopment of the Islamic world? (check all that apply, three correct answers.) a) The Waqf deeds usually contained ambiguities that allowed the trustees (called Mutawalli) to use the resources in their own personal favor. b) It kept resources into uses decided a long time ago and became dysfunctional over time. c) It was a short-term contract and does not leave any room for long-term plans. d) It provided some services to societies, but caused established non-state organizations to become inefficient, therefore kept them from becoming a political force for democratization.

a) The Waqf deeds usually contained ambiguities that allowed the trustees (called Mutawalli) to use the resources in their own personal favor. b) It kept resources into uses decided a long time ago and became dysfunctional over time. d) It provided some services to societies, but caused established non-state organizations to become inefficient, therefore kept them from becoming a political force for democratization.

A10 2. Which one is correct about the factors that made economists rethink about Washington Consensus points? (check all that apply, three correct answers.) a) The experience of East Asian crisis showed that even when some of the recommendations of Washing Consensus, such as liberalization and privatization, are useful in enhancing economic growth, the social cost may be intolerable for parts of the society. b) Asian Tigers (East Asian countries) ignored some of the main features of Washington Consensus and yet experienced high growths. c) None of the countries that adopted Washington Consensus rules had significant growth. d) The countries that grew fastest had not fully adopted the Washington Consensus rules.

a) The experience of East Asian crisis showed that even when some of the recommendations of Washing Consensus, such as liberalization and privatization, are useful in enhancing economic growth, the social cost may be intolerable for parts of the society. b) Asian Tigers (East Asian countries) ignored some of the main features of Washington Consensus and yet experienced high growths. d) The countries that grew fastest had not fully adopted the Washington Consensus rules.

A17 2. Which one is correct about the theory that the author suggests? (Check all that apply, two correct answers) a) The harmful effects of oil revenues are not universal but appear only over the threshold level of oil revenues. b) The effect of oil revenue on economic growth is positive, but the effect disappears at higher levels of oil prices. c) The effect of oil revenue follows a non-linear pattern: it is positive at low levels of oil revenues and turns into a negative effect at higher levels. d) The effect of oil revenue on economic growth is negative, confirming the resource curse theory.

a) The harmful effects of oil revenues are not universal but appear only over the threshold level of oil revenues. c) The effect of oil revenue follows a non-linear pattern: it is positive at low levels of oil revenues and turns into a negative effect at higher levels.

A19 2. (2001 paper) Which one is correct about demographic consequences and challenges in the MENA region? (check all that apply, two correct answers.) a) The high proportion of the young population creates challenges for population programs such as providing quality reproductive health services for young women. b) The MENA region has turned its population challenges into a demographic bonus in recent decades. c) The region's economic dependency rate, the ratio of economically inactive to economically active, is one of the highest in the world. d) MENA's population is young, therefore the region does not face challenges related to the elderly population.

a) The high proportion of the young population creates challenges for population programs such as providing quality reproductive health services for young women. c) The region's economic dependency rate, the ratio of economically inactive to economically active, is one of the highest in the world.

A6: 1. (Devlin, 2010, Chapter 2) Which one is correct about the main drivers of growth in developing countries and/or developed countries? (check all that apply, two correct answers.) a) The main drivers of growth in most developing countries have been the accumulation of labor and capital. b)Developed countries have more capital, therefore capital accumulation is the main driver of growth in these countries. c) Labor has been the main driver of growth in most developed countries. d) Growth in total factor productivity has been the main factor of growth in developed countries.

a) The main drivers of growth in most developing countries have been the accumulation of labor and capital. d) Growth in total factor productivity has been the main factor of growth in developed countries.

A22 3. Which one is correct about social transfers in MENA countries? (check all that apply, two correct answers.) a) The majority of social transfer has been concentrated in public guarantees to free education and primary health care services, subsidies on basic food items and energy, public employment and employee protection. b) Cash assistance programs are relatively centralized, with generally low targeting efficiency and low ratios of transfer amounts relative to the income of the poor. c) MENA countries demonstrate a relatively low level of social transfer. d) Food subsidy programs are desirable because they benefit poor, rather than rich, both in absolute terms and in relative terms.

a) The majority of social transfer has been concentrated in public guarantees to free education and primary health care services, subsidies on basic food items and energy, public employment and employee protection. b) Cash assistance programs are relatively centralized, with generally low targeting efficiency and low ratios of transfer amounts relative to the income of the poor.

A18 3. Which one is correct about labor markets in the MENA region? (check all that apply, three correct answers.) a) The most common sub-markets can be identified along the lines of public versus private jobs and formal versus informal jobs. b) Public employment in MENA countries has been very limited with wages related to the productivity of workers. c) Government intervention has been in the forms of setting the minimum wage, security of tenure, and non-wage benefits. d) Labor markets in the MENA include several sub-markets with regard to employment and wage-setting behavior.

a) The most common sub-markets can be identified along the lines of public versus private jobs and formal versus informal jobs. c) Government intervention has been in the forms of setting the minimum wage, security of tenure, and non-wage benefits. d) Labor markets in the MENA include several sub-markets with regard to employment and wage-setting behavior.

A21 2. Which one is correct about characteristics of human development in the MENA region? (check all that apply, three correct answers.) a) The negative relationship between income and fertility rate is weaker in MENA compared to the other regions due to the region's oil wealth and its resilient gender social norms. b) MENA countries as a group, have performed relatively well in human development compared with other developing countries, but there have been huge variations in degrees of their successes. c) In 2011, several MENA countries had life expectancy index that was, conditional on per capita GDP, above the global average. d) MENA countries have experienced a rapid increase in education such that in 2011, conditional on per capita GDP, the region's education level is much higher than the global average.

a) The negative relationship between income and fertility rate is weaker in MENA compared to the other regions due to the region's oil wealth and its resilient gender social norms. b) MENA countries as a group, have performed relatively well in human development compared with other developing countries, but there have been huge variations in degrees of their successes. c) In 2011, several MENA countries had life expectancy index that was, conditional on per capita GDP, above the global average.

A2: 3. Which one is correct about the Sykes-Picot agreement? (Check all that apply, three correct answers.) a) The part of agreement about Palestine was undermined by the Balfour Declaration in which Britain announced Palestine as a "National Home for Jewish People." b) Its final version was an agreement between France and Britain that divided south Turkey, Iraq, Syria, and Lebanon between themselves. c) It was an agreement between Britain and France to support the Arab Revolt against the Ottoman Empire. d) Based on the agreement, northern parts of the region were under French control and southern parts were under British control, and Palestine was subject to an international regime.

a) The part of agreement about Palestine was undermined by the Balfour Declaration in which Britain announced Palestine as a "National Home for Jewish People." b) Its final version was an agreement between France and Britain that divided south Turkey, Iraq, Syria, and Lebanon between themselves. d) Based on the agreement, northern parts of the region were under French control and southern parts were under British control, and Palestine was subject to an international regime.

A2: 2. Which one is correct about the Arab Revolt and its subsequent events. (Check all that apply, three correct answers.) a) The revolt was the outcome of a treaty between Mecca's local ruler, Sharif Hussein, and British high commissionaire in Egypt, Sir Henry McMahon, in which Britain promised to support Arab independence in order to undermine Ottomans. b) It generated an independent Arab state whose boundary stretched from Iranian border in the east to the Mediterranean Sea in the west. c) Arab Revolt was the beginning of dismemberment of Ottoman Empire. d) The agreement based on which the revolt started, was immediately violated by another agreement between France and Britain in which they divided the region among themselves.

a) The revolt was the outcome of a treaty between Mecca's local ruler, Sharif Hussein, and British high commissionaire in Egypt, Sir Henry McMahon, in which Britain promised to support Arab independence in order to undermine Ottomans. c) Arab Revolt was the beginning of the dismemberment of Ottoman Empire d) The agreement based on which the revolt started, was immediately violated by another agreement between France and Britain in which they divided the region among themselves.

A25 (on final review) 2. Which one is correct about governance quality in the MENA region compared to the other regions? (check all that apply, three correct answers.) a) The spotlight of weak inclusiveness falls on gender inequality, but some other groups such as people in rural areas also suffer from lack of enough public services. b) Internal checks and balances across the branches of government are uniformly weak. c) Governments in the region have had unacceptable records in providing good coverage of public goods. d) No country guarantees citizens the right to government information, and some countries actively repress such a right.

a) The spotlight of weak inclusiveness falls on gender inequality, but some other groups such as people in rural areas also suffer from lack of enough public services. b) Internal checks and balances across the branches of government are uniformly weak. d) No country guarantees citizens the right to government information, and some countries actively repress such a right.

A5: 3. Which one is correct about the assumptions that drove Arab countries in adopting economic policies? (check all that apply, two correct answers.) a) The supply-and-demand mechanism was viewed as inferior to central planning and price control. b) The large-scale private sector was seen as untrustworthy, therefore, they were subject to state licensing and heavy price controls. c) Profit-and-loss was considered as the main driver of activities in the public sector and to keep these activities under control. d) Foreign investments were considered as the main source of finance due to the lack of enough domestic resources.

a) The supply-and-demand mechanism was viewed as inferior to central planning and price control. b) The large-scale private sector was seen as untrustworthy, therefore, they were subject to state licensing and heavy price controls.

A9 3. Which one is correct about the textile industry in Syria? (check all that apply, three correct answers.) a) The upstream segment is overcapitalized but suffers from low capacity utilization and low labor productivity. b) A central problem of the textile industry is the weak market connection, in particular, the weak link between publicly owned upstream segments and privately owned downstream segments. c) Downstream segment of the textile industry is very efficient and produces for supplying in the world market. d) Upstream public segments of the industry are supported by all types of trade barriers, subsidies, and price controls.

a) The upstream segment is overcapitalized but suffers from low capacity utilization and low labor productivity. b) A central problem of the textile industry is the weak market connection, in particular, the weak link between publicly owned upstream segments and privately owned downstream segments. d) Upstream public segments of the industry are supported by all types of trade barriers, subsidies, and price controls.

A18 5. Which one of the following is correct about MENA region's employment prospect and reform policies? (check all that apply, two correct answers.) a) There is a need to modify the wage bargaining mechanism to enhance the link between wage and non-wage benefits with the underlying productivity growth. b) A priority for policymakers must be to increase public employment to deal with high unemployment. c) Policies such as high severance payments, prior authorization and notification period to lay off workers must be a part of the reforms to improve labor market prospects. d) Policy choices have been focused on active labor market policies such as job search assistance, vocational education, and microfinance programs, rather than the underlying problem of high levels of employee protection.

a) There is a need to modify the wage bargaining mechanism to enhance the link between wage and non-wage benefits with the underlying productivity growth. d) Policy choices have been focused on active labor market policies such as job search assistance, vocational education, and microfinance programs, rather than the underlying problem of high levels of employee protection.

A4: 3. Strategies of reform that heavily rely on reducing the possibilities of government failure suffer from which one of the following problems? (check all that apply, three correct answers.) a) They usually ignore the fact that markets fail very often. b) There are always some unorthodox shortcuts, ignored by conventional reform agenda, that may make rapid growth feasible. c) The list of the required reforms contains some short and usually unimportant factors. d) The reform agenda is complicated and the items are inherently complementary.

a) They usually ignore the fact that markets fail very often. b) There are always some unorthodox shortcuts, ignored by conventional reform agenda, that may make rapid growth feasible. d) The reform agenda is complicated and the items are inherently complementary.

A7: 4. Table 4 shows the growth accounting for MENA and other regions. Which one of the following is correct about factors affecting growth? (check all that apply, three correct answers.) a) Total factor productivity has decreased in the MENA so much that it outweighed the effect of capital accumulation. b)The main source of growth in other regions of the world was growth in total factor productivity. c) In East Asia, both total factor productivity and capital accumulation contributed to growth. d) Non-Oil countries in MENA had a better performance both in total factor productivity and capital accumulation.

a) Total factor productivity has decreased in the MENA so much that it outweighed the effect of capital accumulation. c) In East Asia, both total factor productivity and capital accumulation contributed to growth. d) Non-Oil countries in MENA had a better performance both in total factor productivity and capital accumulation.

A5: 2. Which one is correct about the economic policies in Turkey after its real independence in 1923? (check all that apply, three correct answers.) a) Turkey started with relying on the private sector, and only after the world recession of the late 1920s, it turned into protective measures. b) Turkey's five-year plans emphasized on local processing of its primary commodities and minerals. c) Private banks came to the government's help and financed the big projects whenever the government did not have enough resources. d) The big-push strategy in Turkey inevitably created the crisis of growing budget deficit and outsized bureaucracy.

a) Turkey started with relying on the private sector, and only after the world recession of the late 1920s, it turned into protective measures. b) Turkey's five-year plans emphasized on local processing of its primary commodities and minerals. d) The big-push strategy in Turkey inevitably created the crisis of growing budget deficit and outsized bureaucracy.

A11 2. Which one is correct about the main differences between the Islamic world and the western world in the nineteenth century? (check all that apply, two correct answers.) a) West European industrialists, merchants, and financiers started to play growing roles in their economies whereas in the Islamic world only minorities who had connections contacts with the West, began to register economic advances. b) Waqf system in the Islamic world was transformed into inefficient governmental agencies. c) By the nineteenth century, enterprises were in general smaller, therefore, more competitive in the West than in the Islamic world. d) There was arbitrary taxation and outright expropriation in the Islamic world when western countries started their efforts to make governments respect private property rights.

a) West European industrialists, merchants, and financiers started to play growing roles in their economies whereas in the Islamic world only minorities who had connections contacts with the West, began to register economic advances. d) There was arbitrary taxation and outright expropriation in the Islamic world when western countries started their efforts to make governments respect private property rights.

A1: 4. Which one is the main interlink between the countries in the Middle East. (Check all that apply, three correct answers.) a) OPEC (Organization of Petroleum Exporting Countries) is the main economic and political link between countries in the Middle East. b) Capital flow in the form of FDI is a less well-known factor that links mostly oil rich countries and other countries. c) Many citizens of labor abundant countries work in the wealthy countries of the region, therefore, remittance plays a big role in the economy of such countries. d) The countries are linked through many bilateral and multilateral agreements.

b) Capital flow in the form of FDI is a less well-known factor that links mostly oil rich countries and other countries. c) Many citizens of labor abundant countries work in the wealthy countries of the region, therefore, remittance plays a big role in the economy of such countries. d) The countries are linked through many bilateral and multilateral agreements.

A15 3. Population, income growth, and energy intensity are among the main driving forces behind the demand for energy. Which one of the following is probably correct about the future of these factors? (check all that apply, three correct answers.) a) Income growth in future will be lower than income growth in the past. b) Energy intensity, defined as energy per unit of GDP, will improve at an accelerated rate in future compared to past. c) Population growth in future will be lower than population growth in the past. d) A long-term structural shift away from industry and toward less energy intensive activities is a major factor in explaining the changes in energy intensity, defined as energy per unit of GDP.

b) Energy intensity, defined as energy per unit of GDP, will improve at an accelerated rate in future compared to past. c) Population growth in future will be lower than population growth in the past. d) A long-term structural shift away from industry and toward less energy intensive activities is a major factor in explaining the changes in energy intensity, defined as energy per unit of GDP.

A12 5. Which one is correct about Mudarabah and Musharaka, both participatory financing methods? (check all that apply, two correct answers.) a) Because of their participatory nature, both parties have to contribute both capital and skills. b) In Mudarabah, one partner provides capital and the other contributes expertise/managerial skills. c) Both forms are designed in a way that the difference between conventional debt-finance banking and Islamic Banking is trivial at best. d) Declining Musharaka, which is a common residential mortgage contract, is based on a contract that a bank and a household together buy a house, thus share gains and losses.

b) In Mudarabah, one partner provides capital and the other contributes expertise/managerial skills. c) Both forms are designed in a way that the difference between conventional debt-finance banking and Islamic Banking is trivial at best.

A4. 4. Which one is correct about the relationship between capabilities and potential output in Rodrik's Model? (check all that apply, two correct answers.) a) For all economies, rich or poor, as capabilities improve, income per capita increases at the same rate. b) In both very poor and very rich economies, increase in capabilities results in a small increase in output per capita. c) It is an S-shaped relationship. d) Middle-income countries do not benefit much from investments in capabilities.

b) In both very poor and very rich economies, increase in capabilities results in a small increase in output per capita. c) It is an S-shaped relationship.

A8 5. Which one is correct about politicians' reactions to pressures for structural reforms suggested by international organizations. (Check all that apply, three correct answers.) a) In many cases, they accepted the reforms quoting they are offered by the well-reputed international organizations. b) In many cases, they rejected the reforms by referring to the harmful consequences of reform to equity. c) In many cases, they publicly rejected the reforms, but quietly pursued their implementations. d) In many cases, they accepted the reforms, but claimed that they are being implemented purely out of domestic calculations and concerns.

b) In many cases, they rejected the reforms by referring to the harmful consequences of reform to equity. c) In many cases, they publicly rejected the reforms, but quietly pursued their implementations. d) In many cases, they accepted the reforms, but claimed that they are being implemented purely out of domestic calculations and concerns.

A9 2. Which one of the following is correct about industrial policy in general and in the MENA region? (check all that apply, two correct answers.) a) Empirically, there is very strong evidence to support the link between industrial policy and sectoral TFP growth. b) Industrial policy is generally any type of intervention or government policy that attempts to alter the sectoral structure of production toward sectors that offer better perspective for economic growth than would occur in the absence of such intervention. c) In the MENA region, industrial policy has been focused on building up state-owned enterprises while providing protection for firms through tariff, non-tariff barriers, and subsidies. d) Successful cases of innovation clusters usually happen when government promotes innovation through software and industrial parks, and private sector follows government actions.

b) Industrial policy is generally any type of intervention or government policy that attempts to alter the sectoral structure of production toward sectors that offer better perspective for economic growth than would occur in the absence of such intervention. c) In the MENA region, industrial policy has been focused on building up state-owned enterprises while providing protection for firms through tariff, non-tariff barriers, and subsidies.

A3: 3. Which one is correct about Total Factor Productivity (TFP)? (check all that apply, two correct answers.) a) The biggest variations among countries of the world are in the capital accumulation and population growth. TFP plays a small role. b) Institutional improvement may be an important factor in TFP. c) TFP is the part of the output explained by labor and d) TFP is usually thought to be the result of technological progress.

b) Institutional improvement may be an important factor in TFP. d) TFP is usually thought to be the result of technological progress.

A2: 4. Which one is correct about "mandatory rules"? (Check all that apply, two correct answers.) a) It entirely violated the Sykes-Picot agreement. b) It announced that certain communities formerly belonging to the Turkish empire had not yet reached a stage needed to become fully independent, thus, their independence was subject to advice by a mandatory unit. c) It was part of an agreement between the League of Nations and the two European powers, France and Britain. d) Britain acquired the mandates of Iraq and Palestine and France the mandate of greater Syria.

b) It announced that certain communities formerly belonging to the Turkish empire had not yet reached a stage needed to become fully independent, thus, their independence was subject to advice by a mandatory unit. d) Britain acquired the mandates of Iraq and Palestine and France the mandate of greater Syria

A8 4. Which one is correct about the motivations of political leaders in avoiding structural reforms? (Check all that apply, two correct answers.) a) Public enterprises often achieved their social goals and their social benefits outweighed their economic harms. b) Leaders of socialist regimes often defended the continuation of the public sector's activities with the notion of equity. c) In non-socialist countries, the economic cost-benefit criteria often were in favor of keeping public enterprises. d) Economic risks of inefficient public sectors may NOT outweigh the political risk of giving up the leverage over resources.

b) Leaders of socialist regimes often defended the continuation of the public sector's activities with the notion of equity. d) Economic risks of inefficient public sectors may NOT outweigh the political risk of giving up the leverage over resources.

A24 2. Which one is correct about economies' rank on business-friendly regulations, according to Figure 1.1? (Check all that apply, two correct answers) a) All the Arab countries have similar rankings. b) Majority of OECD countries rank lower (i.e., better) than the average of other regions. c) The average ranking of Arab countries is lower (i.e., better) than the average ranking of the entire MENA countries. d) Some Arab countries rank lower (i.e., better) than the average of OECD countries, something you cannot see for Latin America and South Asia.

b) Majority of OECD countries rank lower (i.e., better) than the average of other regions. d) Some Arab countries rank lower (i.e., better) than the average of OECD countries, something you cannot see for Latin America and South Asia.

A4: 5. Which one is correct about the four channels of economic growth and their effectiveness in different types of economies? (check all that apply, two correct answers.) a) Because manufacturing activities in developing countries cannot converge to the level in the industrialized world, it is not a reliable source of growth for these countries. b) Moving resources from traditional activities into manufacturing is potentially the most reliable source of economic growth for poor countries, because of the big difference between relative productivity of these two sectors. c) Fundamental channel refers to broad-based investments in human capital and institutions and is not very effective for poor countries. d) Reallocating resources from agricultural activities into service activities is the best hope for rapid growth in poor economies.

b) Moving resources from traditional activities into manufacturing is potentially the most reliable source of economic growth for poor countries, because of the big difference between relative productivity of these two sectors. c) Fundamental channel refers to broad-based investments in human capital and institutions and is not very effective for poor countries.

A12 2. Which one is correct about the main principles of Islamic Banking and Finance system, according to El Hawary? (check all that apply, three correct answers.) a) Any financial transactions on any type of commodities are allowed as long as the parties voluntarily agree on terms and conditions. b) Neither party should be exploited. c) Financial transactions should reflect symmetrical share of risk/return distribution among parties. d) Financial transactions must have material finality, i.e., they should link to a real underlying transaction of a physical commodity.

b) Neither party should be exploited. c) Financial transactions should reflect symmetrical share of risk/return distribution among parties. d) Financial transactions must have material finality, i.e., they should link to a real underlying transaction of a physical commodity.

A15 5. Which one of the following is correct about the demand for liquid fuels by sector, according to Figure 3? (check all that apply, two correct answers.) a) Power production has the biggest share of the demand for liquid and this share will increase even more in the future. b) OECD demand for liquid in transportation has almost reached its peak and will decline in future. c) OECD industrial demand for liquid in all sectors will grow fast. d) The largest increase in demand will come from transportation and industries in non-OECD countries.

b) OECD demand for liquid in transportation has almost reached its peak and will decline in future. d) The largest increase in demand will come from transportation and industries in non-OECD countries.

A15 1. (Finley, 2012) Which one is correct about the big picture of the oil market? (check all that apply, two correct answers.) a) The biggest part of the growth in the demand for oil has been in OECD countries. b) Oil is the dominant fuel in the energy market. c) Transportation has the biggest part of the demand for oil. d) Oil's share in energy has been increasing in recent decades.

b) Oil is the dominant fuel in the energy market. c) Transportation has the biggest part of the demand for oil.

A13 4. Which one is correct about the flow of FDI in the Arab world compared to the size of national economies. (Check all that apply, two correct answers.) a) The stock of FDI as the percentage of GDP in the region is low, but it is higher than that of developing countries. b) Only in two countries, FDI stock as a percentage of GDP is comparable to that of successful developing countries. The remaining were not successful in attracting FDI. c) According to the UNCTAD data, FDI flows comprised about 5 percent of the region's gross capital formation in 2000. d) Although the amount of FDI is small, because the countries' economies are in general small, FDI as the percentage of GDP is large.

b) Only in two countries, FDI stock as a percentage of GDP is comparable to that of successful developing countries. The remaining were not successful in attracting FDI. c) According to the UNCTAD data, FDI flows comprised about 5 percent of the region's gross capital formation in 2000.

A16 4. Which one of the following factors determines that long-run performance of most oil producers in MENA? (check all that apply, two correct answers.) a) Because government consumption decreases in favor of investment, there will not be sufficient demand in markets. b) Overextension of government may lead to economy-wide inefficiencies, corruption, and rent-seeking, among other wastes. c) Oil revenue is volatile, and this turbulence will spill over to real exchange rate leading to a boom-bust cycle in the economy. d) Oil is a permanent, i.e., non-exhaustible, wealth, and it prevents countries from investing in advanced technologies.

b) Overextension of government may lead to economy-wide inefficiencies, corruption, and rent-seeking, among other wastes. c) Oil revenue is volatile, and this turbulence will spill over to real exchange rate leading to a boom-bust cycle in the economy.

A22 4. Which one of the following is correct about pension systems in the MENA region? (check all that apply, two correct answers.) a) Most pension systems cover all categories of workers in the public and private sectors. b) Pension systems tend to pay more favorable to higher income and skilled relative to low-income and unskilled workers. c) Average pension wealth, an index of the generosity of the pension system that measures the present value of the future pension benefits, is much higher in MENA countries compared to OECD countries. d) Pension wealth is higher for men than for women, and this adds to the problem of gender inequality.

b) Pension systems tend to pay more favorable to higher income and skilled relative to low-income and unskilled workers. c) Average pension wealth, an index of the generosity of the pension system that measures the present value of the future pension benefits, is much higher in MENA countries compared to OECD countries.

A8 1. Which one of the following was among the designed goals of state-owned enterprises? (Check all that apply, two correct answers.) a) Competing with international companies. b) Providing jobs for the rapidly expanding labor force c) Providing finance for research and development in high tech industries. d) Supplying cheap inputs to other industries.

b) Providing jobs for the rapidly expanding labor force d) Supplying cheap inputs to other industries.

A5: 5. Which one was among the development policies Iran followed under Pahlavi's dynasty? (check all that apply, two correct answers.) a) The Islamic revolution of 1979 turned the state-centered structure of the economy in Iran into a private-based economy. b) Similar to Turkey, the state apparatus and the armed forces grew fast, and after the great depression pushed the economy toward import substitution policies. c) Petroleum export, continued import substitution policies, and a division of labor between the public and private sectors were three main strategies of Iran's policies after the 1953 political crisis. d) Unlike Arab countries, Iran was a liberal state, therefore, economic policies were based on private sectors as the leading force.

b) Similar to Turkey, the state apparatus and the armed forces grew fast, and after the great depression pushed the economy toward import substitution policies. c) Petroleum export, continued import substitution policies, and a division of labor between the public and private sectors were three main strategies of Iran's policies after the 1953 political crisis.

A1: 3. Which one is correct about government types in the region. (Check all that apply, two correct answers.) a) Most countries are military dictatorships. b) Some countries have fragmented governmental institutions along ethnic, religions, and regional lines. c) Countries such as Lebanon and Turkey are classified as fragmented democracies. d) All countries are ruled by Islamic governments with some democratic trimmings.

b) Some countries have fragmented governmental institutions along ethnic, religions, and regional lines. c) Countries such as Lebanon and Turkey are classified as fragmented democracies.

A8 3. Which one of the following was among the groups that resisted reforms in the public sector and contributed to its continued dominance? (Check all that apply, three correct answers.) a) The unemployed segments of the labor force. b) Some external donors and international organizations. c) Some managers in the private sector. d) The managers of public enterprises.

b) Some external donors and international organizations. c) Some managers in the private sector. d) The managers of public enterprises.

A13 2. Which one is correct about the flow of FDI into Arab world compared to the other developing regions (Check all that apply, two correct answers.) a) The flow of FDI in the Arab world was almost the same as that of other regions. b) The flow of FDI in the Arab world was less than that of Latin America and Asia and Pacific. c) Asia and Pacific attracted more than half of FDI that goes to all developing countries. d) The flow of FDI in the Arab world was similar to that of Africa.

b) The flow of FDI in the Arab world was less than that of Latin America and Asia and Pacific. d) The flow of FDI in the Arab world was similar to that of Africa.

A11 3. Which one of the following is correct about the contract law in the Islamic world at around 1000 AD? (check all that apply, one correct answers.) a) Insecurity in the Islamic World moved the resources into large firms that mostly operated inefficiently. b) The main form of contract between two individuals, called Mudaraba, became null and void if one of the parties died, and the entire contract needed renegotiation. c) Because the Islamic inheritance law left everything to one person, the oldest son, it prevented diversity and efficiency. d) Larger commercials and financial enterprises produced new communication and coordination problems and stimulated the development of modern forms of organizations.

b) The main form of contract between two individuals, called Mudaraba, became null and void if one of the parties died, and the entire contract needed renegotiation.

A4: 1. (Rodrick, 2013) Which one is correct about the global distribution of income? (check all that apply, two correct answers.) a) The dominant force behind the global inequality is the inequality within countries, not between countries. b) The middle of the distribution has filled out in recent years, mostly because of China's rapid growth. c) Income growth in poorest countries is the most powerful force behind diminishing global inequality. d) Economic recessions in rich countries, especially the 2008 recession, is a key factor in diminishing global poverty.

b) The middle of the distribution has filled out in recent years, mostly because of China's rapid growth. c) Income growth in poorest countries is the most powerful force behind diminishing global inequality.

A6: 3. Before WWI, some Ottoman rulers, especially in Egypt, attempted to implement economic and administrative reforms. Most of these attempts were unsuccessful. Which one of the followings was among the main reasons for this failure? (check all that apply, three correct answers.) a) Big landlords heavily resisted the reforms that involved any change in land ownership. b) The primary objective of them was to increase government revenue, not to improve the situation. c) Improved property right was seen by landowners as a way for the government to easily identify and appropriate their wealth. d) The influence of these rulers was undermined by European powers and weakened the reform efforts.

b) The primary objective of them was to increase government revenue, not to improve the situation. c) Improved property right was seen by landowners as a way for the government to easily identify and appropriate their wealth. d) The influence of these rulers was undermined by European powers and weakened the reform efforts.

A17 3. Which one is among the explanations of the relationship between oil revenues and economic growth suggested by the paper? (Check all that apply, three correct answers) a) The elevated levels of oil revenues increase the inflation and reduce investment and economic growth. b) The rapid growth in public spending, which often follows extreme oil price increases, reduces spending quality and introduces entitlements, including recurrent cost commitments, which are often not sustainable in the long-run. c) When oil revenues are excessively high, the real exchange rate becomes highly overvalued. So, too much oil revenues exert a negative effect on growth. d) The revenue streams from oil can finance productive physical and social investment so that the effect of oil revenues could be positive until a certain level.

b) The rapid growth in public spending, which often follows extreme oil price increases, reduces spending quality and introduces entitlements, including recurrent cost commitments, which are often not sustainable in the long-run. c) When oil revenues are excessively high, the real exchange rate becomes highly overvalued. So, too much oil revenues exert a negative effect on growth. d) The revenue streams from oil can finance productive physical and social investment so that the effect of oil revenues could be positive until a certain level.

A22 1. (Devlin, Chapter 12) Which one is correct about poverty and inequality in the MENA region? (check all that apply, two correct answers.) a) Relative to other regions of the world, the MENA region has a higher level of absolute poverty. b) The region experienced a rapid decline in poverty in the 1960s and 1970s, but the decline stalled during 1980s and 1990s. c) Inequality measure based on per capita consumption indicates that MENA countries suffer from high inequality. d) The region has a significant number of near-poor households.

b) The region experienced a rapid decline in poverty in the 1960s and 1970s, but the decline stalled during 1980s and 1990s. d) The region has a significant number of near-poor households.

A18 2. Which one is correct about jobs and wages in the MENA region? (check all that apply, two correct answers.) a) Most of the recent job creations have been in the high-wage modern services sector such as financial markets. b) The rise and fall of real wages have closely followed the rise and fall of oil prices. c) Demand for jobs and supply of jobs (job creation) grew almost at the same rate in recent decades. d) Two main drivers of demand for jobs have been high working-age population growth and rising participation rate of women.

b) The rise and fall of real wages have closely followed the rise and fall of oil prices. d) Two main drivers of demand for jobs have been high working-age population growth and rising participation rate of women.

A16 2. Which one is among the facts we know about OPEC's behavior? (check all that apply, two correct answers.) a) There is inherent stability in the OPEC that makes it easy to control price by reducing production. b) There is a big producer, Saudi Arabia, that plays the role of leading and residual producer. c) High-cost producers have sold all they could produce and low-cost producers have produced all they could sell. d) OPEC oil prices have had a self-correcting mechanism that stabilizes the price.

b) There is a big producer, Saudi Arabia, that plays the role of leading and residual producer. c) High-cost producers have sold all they could produce and low-cost producers have produced all they could sell.

A8 2. Which one of the following was among the practical outcomes of developing state-led enterprises? (Check all that apply, three correct answers.) a) Investment was not enough, so these industries could not grow. b) These industries, originally created to bring in foreign currencies, too often absorbed them and created large foreign debts. c) These industries failed to produce sufficient jobs. d) The deficit that these industries created, resulted in budget deficits and contributed to high inflations.

b) These industries, originally created to bring in foreign currencies, too often absorbed them and created large foreign debts. c) These industries failed to produce sufficient jobs. d) The deficit that these industries created, resulted in budget deficits and contributed to high inflations.

A6: 2. Which one is correct about stylized facts on growth accounting of the MENA region? (check all that apply, two correct answers.) a) Human capital per worker played the biggest role in growth in the MENA region. b) Total Factor Productivity was an important factor in growth in MENA only in 1960-1970. c) After 1970, the MENA region faced negative growth in Total Factor Productivity. d) During 1980-1990, MENA accumulated a huge amount of capital and increased growth in output.

b) Total Factor Productivity was an important factor in growth in MENA only in 1960-1970. c) After 1970, the MENA region faced negative growth in Total Factor Productivity.

A21 3. Which one is among the characteristics of youth life in MENA countries? (check all that apply, three correct answers.) a) Unemployed young people in MENA are poor, mostly because their parents cannot support them during the unemployment period. b) Transition to marriage and family formation has been difficult, partly because of unemployment. As a result, the age at marriage has been rising involuntarily. c) Because of fast population transition, these countries have a large cohort of young people and suffer from labor market pressure. d) The low rate of turnover and small size of the formal sector, which is the prime destination of educated youth, intensifies the unemployment problem of young people.

b) Transition to marriage and family formation has been difficult, partly because of unemployment. As a result, the age at marriage has been rising involuntarily. c) Because of fast population transition, these countries have a large cohort of young people and suffer from labor market pressure. d) The low rate of turnover and small size of the formal sector, which is the prime destination of educated youth, intensifies the unemployment problem of young people.

A10 4. Which one of the following is correct about the experience of Turkey in economic reforms? (check all that apply, three correct answers.) a) Turkey's economy grew fast in the 90s and this growth was stable and sustainable. b) Turkey that was among the pioneers in adopting import-substitution industrialization (ISI), changed its strategy to export-led growth. c) Turkey followed the policy of "tie yourself to the mast" by trying to integrate with the European Union. d) Turkey's economy suffered from very high inflation and high debts during the 90s.

b) Turkey that was among the pioneers in adopting import-substitution industrialization (ISI), changed its strategy to export-led growth. c) Turkey followed the policy of "tie yourself to the mast" by trying to integrate with the European Union. d) Turkey's economy suffered from very high inflation and high debts during the 90s.

A18 1. (Devlin, Chapter 11) Which one is correct about the characteristics of unemployed in the MENA region? (check all that apply, two correct answers.) a) Men are more likely to be unemployed compared to women. b) Unemployed are more likely to be young (first-time job seekers) c)Unemployed are relatively uneducated. d) Unemployed are unskilled.

b) Unemployed are more likely to be young (first-time job seekers) d) Unemployed are unskilled.

A11 1. Which one of the following has been among the economic institutions in the Islamic world? (check all that apply, two correct answers.) a) Banks that charged very high interest rates prevented organizations from growing beyond a certain size. b) Islamic law of inheritance leaves all the wealth of a person to his oldest son. c) Islamic law recognizes only flesh-and-blood individuals, not corporate entities beyond individuals. d) Most public goods were provided by private citizens through a trust system called Waqf.

c) Islamic law recognizes only flesh-and-blood individuals, not corporate entities beyond individuals. d) Most public goods were provided by private citizens through a trust system called Waqf.

A12 3. Which one of the following is correct about Islamic Banking and Finance in practice? (check all that apply, two correct answers.) a) Because of the risk-sharing principle, non-participatory financing is very limited in practice. b) Murabaha is a genuine Islamic transaction that fully follows the spirit of Sharia. c) Murabaha (cost-plus sale) and Ijara (lease), both non-participatory types of transactions, are dominant forms of transactions. d) Murabaha, the way it is practiced now, is mostly the same as interest-based transactions, even though its appearance complies with Sharia law.

c) Murabaha (cost-plus sale) and Ijara (lease), both non-participatory types of transactions, are dominant forms of transactions. d) Murabaha, the way it is practiced now, is mostly the same as interest-based transactions, even though its appearance complies with Sharia law.

A21 5. Which one of the following is correct about inequality in MENA countries? (check all that apply, two correct answers.) a) MENA countries are less equal compared to other middle-income countries. b) Job security, provided by most governments of the MENA region, improves equality of opportunities. c) The inequality-adjusted health index is the same for MENA and middle-income countries, but the education index is much lower, indicating that the source of the decrease in inequality-adjusted human development index is education, not health. d) Distinguishing between equality of outcomes versus equality of opportunities is particularly important for MENA countries because political debates have focused on equality of outcomes, not opportunities.

c) The inequality-adjusted health index is the same for MENA and middle-income countries, but the education index is much lower, indicating that the source of the decrease in inequality-adjusted human development index is education, not health. d) Distinguishing between equality of outcomes versus equality of opportunities is particularly important for MENA countries because political debates have focused on equality of outcomes, not opportunities.

A13 3. Which one is correct about the distribution of the flow of FDI within the Arab world. (Check all that apply, one correct answer.) a) The largest share of FDI goes to the poorest countries. b) The amount of FDI flow over the period of 1970-200 has been almost constant. c) The largest share, in terms of stock and flow, goes to just a few countries, on top of them, Saudi Arabia and Egypt. d) The largest share of FDI goes to the countries that do not have oil.

c) The largest share, in terms of stock and flow, goes to just a few countries, on top of them, Saudi Arabia and Egypt.

A19 (On final review sheet) 1. (2001 paper) Which one is correct about population trends in the MENA region? (check all that apply, two correct answers.) a) The population of the MENA region grew almost at the same rate as other regions of the world. b) The decline in birth and death rates usually happen at the same time as a result of improvement in health conditions. c) The main driver of population growth in the region has been the improvement in human survival by the introduction of modern medical services and public health interventions. d) Even though the decline in fertility rates is expected to continue in the MENA region, the population will continue to grow rapidly for several decades; due to the phenomenon called population momentum.

c) The main driver of population growth in the region has been the improvement in human survival by the introduction of modern medical services and public health interventions. d) Even though the decline in fertility rates is expected to continue in the MENA region, the population will continue to grow rapidly for several decades; due to the phenomenon called population momentum.

A5: 1. Which one is correct about the reasons why government intervention was accepted in most MENA countries in the 20th century? (check all that apply, two correct answers.) a) States in most MENA countries were more efficient than the private sector in creating economic prosperity. b) The experience of the colonial era proved that a strong centralized government can better provide prosperity for citizens than decentralized markets. c) There are theories about state intervention that justifies governments' role in providing basic law and order, regulations, social welfare, and defense, and in MENA these factors were interpreted more extensively than in the west. d) Checks and balances were considered as impeding the stats' progress towards their social and economic goals.

c) There are theories about state intervention that justifies governments' role in providing basic law and order, regulations, social welfare, and defense, and in MENA these factors were interpreted more extensively than in the west. d) Checks and balances were considered as impeding the stats' progress towards their social and economic goals.

A1: 1. (Nugent and Pesaran 2007) What are the three main factors the authors focus on when they introduce the economics of the Middle East? (Check all that apply, one correct answer.) a) War, geography, and institutions b) Economic growth, oil, and conflicts c) Cultural differences, oil, and ethnicity d) Oil, demography, and institutions.

d) Oil, demography, and insitutions