ECON3880 TEST #1 Summer II, 2011Multiple Choice Questions & Problems1. Countries tend to be classified as more or less developed based ona. the literacy rate.b. the poverty rate.*c. the level of income per capita.d. the types of goods they produce.2. Which of the following demonstrates international interdependence?a. the oil shocksb. the debt crisisc. global warming*d. all of the above.3. A subsistence economy isa. a very low income economy.*b. an economy in which people make what they consume.c. an economy in which people receive food for pay.d. all of the above.4. Development economics is the study of thea. alleviation of absolute poverty.b. transformation of institutions.c. allocation of resources in developing countries.*d. all of the above.5. Development economics must have a scope wider than traditional economics becausea. values and attitudes play little role in the pace of development.b. people in developing societies do less utility-maximizing.*c. transformation of social institutions is necessary for development.d. all of the above.6. A good definition of the meaning of development is thea. elimination of absolute poverty.b. improvement in the quality of life.c. fulfillment of the potential of individuals.*d. all of the above.7. Which of the following is not an important objective of development?a. increases in per capita incomeb. the expansion of available choicesc. increases in individual and national self-esteem*d. all of the above are important objectives of development8. The Millennium Development Goals includea. eliminating the proportion of people living on less than $1 per day.*b. universal primary education.c. increasing exports by one half.d. all of the above.9. The core values of development includea. increasing income per person.b. reducing the inequality of income.*c. the ability to meet basic needs.d. all of the above.10. It is not possible for a country to experience*a. economic development without economic growth.b. economic growth without economic development.c. economic growth and economic development simultaneously.d. both (a) and (b) are correct.11. An example of an upper-middle income country isa. India.*b. Brazil.c. Indonesia.d. Nigeria.12. A newly industrialized country isa. the same as a high income country.b. any country that has experienced sustained growth in industry.*c. a special classification given to some upper-middle income countries that have achieved relatively advanced manufacturing sectors.d. any country that has moved out of lower income status.1 3. Which of the following is not a middle-income country?a. Brazilb. Thailand*c. Pakistand. Argentina14. Which of the following is a low-income country?a. Mexicob. Thailandc. Turkey*d. India15. One of the components of the human development index isa. the percentage of the population who are high school graduates.b. the average daily intake of protein.*c. life expectancy at birth.d. the number of doctors per hundred people in the population.16. What percent of the world’s nations have at least five significant ethnic populations?a. 0–10b. 10–20c. 20–30d. 30–40*e. over 4017. What fraction of developing countries have recently experienced some form of significant interethnic conflict?a. less than one-tenthb. a tenth to one-quarterc. one quarter to one half*d. over one half18. Which of the following African countries has recently experienced widespread death and destruction due to ethnic or clan based conflict?a. Rwandab. Zairec. Somalia*d. all of the above19. Which measure uses a common set of international prices for all goods and services produced?*a. purchasing power parity income levelsb. GNP price deflatorsc. foreign exchange rate conversions to U.S. dollarsd. the exchange rate20. The number of units of developing country currency required to purchase a basket of goods and services in a developing country that costs one dollar in the U.S. is given bya. GNP price deflator.b. Human Development Index ranking.*c. purchasing power parity.d. the exchange rate.21. Which of the following is not a policy proposal of the neoclassical counter-revolution school?a. Promoting free tradeb. Privatizing state-owned enterprisesc. Welcoming multinational corporations*d. Promoting trade unions22. Which of the following is an assumption of the Lewis two-sector model?*a. Surplus labor in the rural sectorb. High unemployment in the urban modern sectorc. Rising real urban wagesd. Rising marginal product of labor in the rural sector2 3. The false paradigm model attributes lack of development toa. Inadequate attention to price incentives.*b. Inappropriate advice from rich country economists.c. Low levels of savings and investment.d. A lack of government regulation.24. Which of the following is a criticism of the neoclassical counter-revolution school’s approach?a. Markets are not competitive in developing countries.b. Externalities are common in developing countries.c. Inequality may worsen when interventions are removed in developing countries.*d. All of the above.2 5. Which of the following approaches does not offer an international dependence explanation of underdevelopment?a. The false paradigm model*b. The neoclassical counter-revolutionc. The dualistic development modeld. The neocolonial dependence model26. The neoclassical counter-revolution school supportsa. Trade restrictions.b. State-owned enterprises.*c. Eliminating government regulations.d. Limitations on foreign investors.27. Implicit assumptions from which theories evolve are known as*a. A paradigm.b. Biases.c. Stylized facts.d. Normative economics.2 8. On which of the following does the neoclassical counter-revolution school most blame underdevelopment?*a. Misguided government policiesb. Relatively rigid cultural traditionsc. The legacy of colonialismd. Unfair trade practices on the part of developed countries29. According to the theory of structural patterns of development, which of the following tends to occur as a country develops?*a. A shift from agriculture to industry and servicesb. An increase in the percentage of income spent on foodc. Growth of the rural sectord. A decline in trade as a share of GNP30. In the public choice (or new political economy) approach to development the emphasis is ona. growth in the rural sector.*b. the self-interested behavior of public officials.c. the dependence of LDCs on former colonial powers.d. the inherent efficiency of developing country markets.3 1. The absolute poverty linea. decreases as