Test Bank Development ‫الفرقة الثالثة‬

Multiple Choices
Ch.1
1. Countries tend to be classified as more or less developed based on
a. the literacy rate.
b. the poverty rate.
c. the level of income per capita.
d. the types of goods they produce

2. A subsistence economy is
a. 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.

3. Development economics is the study of the

a. alleviation of absolute poverty.
b. transformation of institutions.
c. allocation of resources in developing countries.
d. all of the above.

4. Development economics must have a scope wider than traditional economics because
a. 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.

5. A good definition of the meaning of development is the

a. elimination of absolute poverty.
b. improvement in the quality of life.
c. fulfillment of the potential of individuals.
d. all of the above.

6. Which of the following is not an important objective of development?

a. increases in per capita income
b. the expansion of available choices
c. increases in individual and national self-esteem
d. all of the above are important objectives of development

7. The Millennium Development Goals include

a. eliminating the proportion of people living on less than $1 per day
b. universal primary education.
c. increasing exports by one half.
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 Test Bank Development ‫الفرقة الثالثة‬
d. all of the above.

8. The core values of development include

a. increasing income per person.
b. reducing the inequality of income.
c. the ability to meet basic needs.
d. all of the above.

1- c 2- b 3- d 4- c 5- d 6- d 7- b 8- c

Ch.2
1. A newly industrialized country is
a. 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.

2. One of the components of the human development index is

a. 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

3. Which measure uses a common set of international prices for all goods and services
produced?
a. purchasing power parity income levels
b. GNP price deflators
c. foreign exchange rate conversions to U.S. dollars
d. the exchange rate

4. 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 by
a. GNP price deflator
b. Human Development Index ranking.
c. purchasing power parity.
d. the exchange rate.

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 Test Bank Development ‫الفرقة الثالثة‬
5. Conditions of today's developed countries at the start of their industrialization differ
from conditions in the developing world in that
a. population growth rates were higher.
b. more advanced technology was available.
c. there were more opportunities for development assistance.
d. none of the above.

6. Most successful examples of modern economic growth have occurred in a country with
a. a temperate-zone climate.
b. a market economy.
c. exports of manufactured goods
d. all of the above

7. Which of following is not an indicator that is used by World Bank in measuring the
level of economic development?
a. life expectancy at birth.
b. adult literacy rate.
c. infant mortality rate.
d. all of the above are not used by the World Bank

8. The dependency burden is

a. a measure of the degree to which the less developed countries are dependent on the rich
industrial countries.
b. the average number of children that a woman gives birth to during her lifetime.
c. the number of babies born per 1000 persons.
d. the percent of the population that is below 15 and above 65 years of age.

9. How many people still live on less than the equivalent of $1.25 per day (new definition
of "extreme poverty")?
a. 100 million.
b. 500 million.
c. 1.4 billion.
d. 2.2 billion.

10. Which of the following is not an indicator that is used to compute the Human
Development Index?
a. life expectancy at birth.
b. real GDP per capita.
c. infant mortality rate.
d. adult literacy rate.

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 Test Bank Development ‫الفرقة الثالثة‬
11. Developing countries are starting to converge with developed countries in the long run
in what respect?
a. Growth rate
b. Income inequality
c. Population
d. Per capita income

1- c 2- c 3- a 4- c 5- d 6- d 7- d
8- d 9- c 10-c 11-d

Chapter 3
1. Which of the following is not a policy proposal of the neoclassical counter-revolution
school?
(a) promoting free trade
(b) privatizing state-owned enterprises
(c) welcoming multinational corporations
(d) promoting trade unions

2. Which of the following is an assumption of the Lewis two-sector model?

(a) surplus labor in the rural sector
(b) high unemployment in the urban modern sector
(c) rising real urban wages
(d) rising marginal product of labor in the rural sector

3. The false paradigm model attributes lack of development to

(a) 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

4. 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.
5. Which of the following approaches does not offer an international dependence
explanation of underdevelopment ?
(a) the false paradigm model
(b) the neoclassical counter-revolution
(c) the dualistic development model
(d) the neocolonial dependence model
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 Test Bank Development ‫الفرقة الثالثة‬
6. The neoclassical counter-revolution school supports
(a) trade restrictions.
(b) state-owned enterprises.
(c) eliminating government regulations.
(d) limitations on foreign investors.

7. Implicit assumptions from which theories evolve are known as

(a) a paradigm.
(b) biases.
(c) stylized facts.
(d) normative economics.

8. On which of the following does the neoclassical counter-revolution school most blame
underdevelopment?
(a) misguided government policies
(b) relatively rigid cultural traditions
(c) the legacy of colonialism
(d) unfair trade practices on the part of developed countries

9. 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 services
(b) an increase in the percentage of income spent on food
(c) growth of the rural sector
(d) a decline in trade as a share of GNP

10. In the public choice (or new political economy) approach to development the emphasis
is on
(a) 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

11. A situation in which government intervention in the economy worsens the economic
outcome is termed
(a) neoclassical failure.
(b) socialism.
(c) government failure.
(d) dependency revolution

12. According to the dependence theory, the developing world is known as the
(a) backward areas.
(b) periphery.
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 Test Bank Development ‫الفرقة الثالثة‬
(c) first world.
(d) Center.

13. The underlying assumption of the Harrod-Domar growth model is that

(a) the incremental capital-out ratio is given by y/k
(b) growth is mainly determined by capital accumulation.
(c) growth can be sustained only if agricultural productivity rises.
(d) developing countries save too much and invest too little.

14. The supply curve of labor to industry in the Lewis model is horizontal if there is
surplus labor in agriculture. This condition persists as long as
(a) the marginal product of labor is less than the average product of labor in agriculture.
(b) the marginal product of labor in agriculture is less than the marginal product of labor in
industry.
(c) there are diminishing returns to labor in agriculture.
(d) the marginal product of labor in agriculture is zero

15. International dependence theories distinguish between two groups of countries known
as
(a) rich-poor.
(b) developed-developing.
(c) center-periphery.
(d) independent-dependent

16. Which of the following is an assumption of the Lewis two-sector model?

(a) surplus labor in industry.
(b) positive marginal product of labor in agriculture.
(c) an upward sloping labor supply curve in industry.
(d) none of the above.

17. The linear stages theory of economic growth fails to recognize that increased
investment is
(a) both a necessary and a sufficient condition.
(b) a necessary but not a sufficient condition.
(c) a sufficient but not a necessary condition.
(d) neither a necessary nor a sufficient condition.

18. Which of the following are components of economic growth

(a) growth in labor force.
(b) technological progress.
(c) investment.
(d) all of the above.

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 Test Bank Development ‫الفرقة الثالثة‬
1- d 2- a 3- b 4- d 5- b 6- c 7- a 8- a 9- a
10-b 11-c 12-b 13- b 14- c 15- c 16- d 17-b 18-d

Ch. 4
1. The absolute poverty line
a. decreases as real income grows.
b. shows the average income of the lowest income group.
c. can be measured with the Lorenz curve.
d. None of the above

2. The Gini coefficient provides a measure of

a. the level of poverty.
b. the level of relative inequality.
c. disguised unemployment.
d. the rate of growth

3. Kuznets' inverted-U hypothesis

a. implies that things must get worse before they get better
b. suggests that inequality will worsen and then improve as a country grows.
c. suggests that inequality will improve and then worsen as a country grows.
d. points out six characteristics of modern economic growth.

4. According to Kuznets, in the process of development inequality in an economy will

normally
a. first rise and then fall.
b. first fall and then rise.
c. remain about the same.
d. show no definite pattern

5. Poverty is better studied with size distribution measures than those based on factor
distribution because
a. Labor income may be highly concentrated in well-paid modern sector workers.
b. some poor farmers may receive a sizable share of income in rent.
c. income from nonmarket activities such as foraging may be important.
d. All of the above

6. Distribution of income according to percentiles, such as the highest 40% or lowest 20%
is known as the ________ distribution of income.
a. size
b. functional
c. GNP-weighted
d. equal-weighted
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 Test Bank Development ‫الفرقة الثالثة‬
7. The poverty gap is the
a. absolute number of people below the international poverty line.
b. percentage of the population below the international poverty line.
c. consumption (measured in dollars) necessary to bring everyone living below the poverty
line up to the poverty line.
d. percentage of a country's total consumption necessary to bring everyone in the country
living below the poverty line, up to the poverty

8. The functional distribution of income refers to the distribution of income between

a. individuals or households.
b. rural individuals or households.
c. urban individuals or households.
d. the factors of production (Land, Labor and capital).

1- d 2- b 3- b 4- a 5- d 6- a 7- d 8- d

 Suppose one percent of national income were transferred from the richest 20% of
households to the poorest 20% of households. The effect on the relative inequality.

Ch. 5
1. The hidden momentum of population growth is caused by
a. the demographic transition.
b. population age structure
c. the opportunity cost of a woman's time
d. children's contribution to income

2. In stage III of the demographic transition

a. the rate and the death rate are relatively low.
b. the birth rate and the death rate are relatively high.
c. the birth rate is relatively high and the death rate is relatively low
d. birth rate is relatively low and the death rate is relatively high

3. Evidence suggests that population growth has negative effects on

a. economic growth.
b. poverty reduction.
c. environment.
d. education.
e. All of the above

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 Test Bank Development ‫الفرقة الثالثة‬
4. The Malthusian population trap assumes that
a. contraception is unavailable.
b. technological progress may be rapid.
c. fertility increases with per capita income.
d. All of the above.

5. Which of the following would most likely reduce the birthrate?

a. public health improvements
b. an increase in child mortality
c. a decline in the availability of secondary education
d. A reduction in the opportunity cost of a woman's time

6. Which of the following is a direct implication of the view that childbearing is an

economic decision?
a. People will not have additional children unless the can earn a profit from doing so.
b. Social factors have no effect on childbearing decisions.
c. Compulsory education will increase fertility because educated children have potential to
earn higher salaries
d. Fertility should fall with improved opportunities for women to work in jobs outside the
home

7. The Malthusian population trap model has been criticized on the grounds that it
a. ignores the role or technological progress.
b. assumes that population growth is primary determined the number of children to have.
c. Both (a) and (b) are correct.
d. Neither (a) nor (b) is correct

1- b 2- a 3- e 4- c 5- a 6- d 7- a

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 Test Bank Development ‫الفرقة الثالثة‬
Ch. 6 & 8
1. Developing countries have not benefited as much expected from their higher education
program because of
(a) lack of program focus on the needs of the country.
(b) increasing returns to scale in each individual’s education.
(c) graduates get jobs in the private sector.
(d) all of the above.

2. Education of girls is a crucial development investment because

(a) it leads to improved child health.
(b) it leads to reduced fertility.
(c) women do most of the work in agriculture.
(d) all of the above.

3. The supply of public school places is determined by

(a) individuals’ demand for education.
(b) direct and indirect costs of schooling.
(c) political processes, often unrelated to economic criteria.
(d) all of the above

4. Human capital is best defined as

(a) the amount of wealth people have.
(b) the amount of money people have to spend on schooling.
(c) human capacities that raise productivity.
(d) the average education level of the population.

5. A major cause of environmental degradation in developing countries is

(a) debt for nature swaps.
(b) poverty.
(c) a lack of public transportation.
(d) land reform

6. Sustainable development means

(a) emphasizing the role of the market.
(b) emphasizing the role of government.
(c) meeting the present generation's needs without compromising the needs of future
generations.
(d) maintaining output growth at a constant rate.

1- a 2- d 3- c 4- c 5- b 6- c

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 Test Bank Development ‫الفرقة الثالثة‬
Ch. 14
1. An argument in favor of foreign direct investment is that it tends to
a) reduce inequality.
b) promote rural development.
c) increase access to modern technology.
d) decrease local ownership.
e) none of the above.

2. Which of the following is an argument against MNCs?

a) A reduction in inequality.
b) An increase in the use of labor intensive technology.
c) A deterioration of the balance of payments accounts.
d) An increase in government tax revenue.
e) None of the above.

3- One of the significant criticisms of MNCs is

a) the relatively low wages they pay.
b) on balance they bring in more capital than officially registered.
c) increased monetary policy effectiveness.
d) all of the above.
e) none of the above.

4. A motivation of developed countries in providing development assistance is

a) the creation of markets.
b) geopolitical influence.
c) genuine humanitarian concern.
d) all of the above.
e) none of the above.

5. With tied aid

a) MNC investment depends on tax concessions.
b) aid recipients must use the aid to purchase goods and services from the donor.
c) aid recipients must follow World Bank/IMF conditionality.
d) all of the above.

6. Which of the following is not a type of portfolio investment?

a) Investment in stocks.
b) Multinational corporation investment.
c) Investment in commercial paper.
d) All are types of portfolio investment.
e) None are types of portfolio investment.

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 Test Bank Development ‫الفرقة الثالثة‬
7. In the two-gap model, which of the following gaps, when binding, leads to foreign aid
having the largest impact on GNP?
a) Fiscal gap.
b) Savings gap.
c) Foreign exchange gap.
d) None of the above.

8. A model comparing savings and foreign exchange constraints to see which is binding
for economic growth is known as a
a) project appraisal.
b) two gap model.
c) computable general equilibrium.
d) trickle down model.
e) none of the above.

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