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MUMBAI UNIVERSITY IDOL MCQ
QUESTION BANK WITH ANSWER FOR ONLINE EXAM
TYBA
ECONOMICS OF GROWTH AND DEVELOPMENT
PART 1
1. Which of the following
could not be considered a major economic system?
a. capitalism.
b. communism.
c. socialism.
d. physical quality of
life index.
Answer: D
2. Economic development
refers to
a. Economic growth.
b. Economic growth plus
changes in output distribution and economic structure.
c. Improvement in the
well-being of the urban population.
d. Sustainable increases
in Gross National Product.
Answer: D
3. OPEC is the
a. a. Organization of
Petroleum Exporting Country.
b. b. Organization of Pre-
European Commission.
c. c. Oil Producing
Economies Caucus.
d. d. Organization of
Problematic Economies Committee.
Answer: B
4. PPP is
a. a theory that tells us
that exchange rates between currencies are in equilibrium when their purchasing
power is the same in both countries.
b. GDP divided by exchange
rate.
c. a measure of income
inequality.
d. a measure of infant
mortality in developing countries.
Answer: D
5. The Physical Quality of
Life Index (PQLI) combines three indicators. They are
a. infant mortality, life
expectancy and adult literacy rate.
b. crime rate, clean
environment and quality of housing.
c. air pollution rate,
water pollution rate and sanitation.
d. health, education and
environment.
Answer: C
6. Infant mortality
a. is defined as the
annual number of deaths of infant under 1 year old per 1,000 live births.
b. reflects the
availability of primary education, the rights of employment and social security.
c. is life expectancy up
to age 3.
d. reflects the
availability of hospitals and childcare facilities, and the parents’ wealth.
Answer: C
7. The Human Development
Index (HDI) summarizes a great deal of social performance in
a single composite index,
combining
a. disparity reduction
rate, human resource development rate and the composite index.
b. longevity, education
and living standard.
c. minimum schooling,
adult literacy and tertiary educational attainment.
d. human resource
training, development and R&D.
Answer: A
8. According to the text,
basic needs include
a. food, clothing and
housing.
b. health, education and
quality housing.
c. adequate nutrition,
primary education, health, sanitation, water supply and housing.
d. longevity and living
standards.
Answer: B
9. ASEAN refers to the
a. Association of South
East Agro Nations.
b. Association of South
East Asian Nations.
c. Alliance of South East
Asian Neighbors.
d. Alliance of South
Eastern African Nations
Answer: B
10. As economic
development proceeds, income inequality tends to follow a(n) __________ curve
a. convex.
b. inverted U-shaped.
c. L-shaped.
d. S-Shaped.
Answer: B
11. According to Lewis’s
model, the dual economy grows only when
a. the modern sector
increases its output share relative to the traditional sector.
b. agricultural sector
uses modern equipment.
c. agricultural sector
hires labor economically.
d. modern manufacturing
sector is labor-intensive.
Answer: D
12. Dual economies are
countries
a. with double capital and
labor
b. with a modern
manufacturing sector as well as traditional agriculture sector.
c. that specialize in
labor-intensive products more than capital-intensive products.
d. with foreign-owned and
domestically-owned capital.
Answer: B
13. The vicious circle
theory states that
a. growing government
assistance create addiction to welfare programs.
b. low income levels
create pressure for money creation.
c. low income levels
create pressure for cheap imports.
d. low per capita income
creates low savings that keep incomes low.
Answer: D
14. The Harrod-Domar
growth model suggests that growth is
a. directly related to
savings and inversely related to the capital/output ratio.
b. directly related to the
capital/output ratio and inversely related to savings.
c. indirectly related to
savings and the capital/output ratio.
d. directly related to
savings and the capital/output ratio.
Answer: D
15. Which of the following
was not a classical economist?
a. Adam Smith.
b. Thomas R. Malthus.
c. John Stuart Mill.
d. John Maynard Keynes.
Answer: D
16. Adam Smith advocated
I laissez-faire.
II the invisible hand.
III free-trade policy.
IV competitive markets.
a. I and II only
b. II and III only
c. I, II and III only
d. I, II, III and IV
Answer: D
17. Rostow’s economic
stages are
a. the preconditions for
takeoff, the takeoff, the drive to maturity, and the age of creative
destruction.
b. the traditional
society, the preconditions for takeoff, the takeoff, the drive to maturity, and
the age of high mass consumption.
c. the preconditions for
consumption, the replication, the drive to maturity, and the age of high mass
consumption.
d. the learning curve, the
age of high mass consumption, post-takeoff, and the
drive to maturity.
Answer: B
18. The essential
difference between capitalism and socialism is that
a. capitalism exploits the
worker and socialism exploits the property owner.
b. capitalism relies on
the market to make economic decisions and socialism uses central planning.
c. capitalism grows
through rent seeking and socialism grows through government direction.
d. capitalism relies on
consumer satisfaction to dictate choices and socialism relies on producer
satisfaction.
Answer: B
19. The ultimate effect of
the “invisible hand” of Adam Smith is that, in a competitive economy, everyone
a. benefits if each acts
in his/her own interest.
b. will increase their
profits in a free market.
c. should act to maximize
economic growth.
d. should act to promote
the public interest.
Answer: A
20. Sen’s welfare theory
relies on
a. individuals’
accomplishments.
b. individuals’
capabilities.
c. individuals’ wealth.
d. individuals’ education.
Answer: A
21. Income inequalities
are often shown on a
a. production possibility
curve.
b. marginal inequality
curve.
c. Sen curve.
d. Lorenz curve.
Answer: D
22. A value of 1 in Gini
index represents
a. low inequality.
b. maximum inequality.
c. 10/10, 000% inequality.
d. 1% inequality.
Answer: B
23. The Lorenz curve shows
a. patterns of poverty
between developed and developing countries.
b. the change in GDP per
capita over time.
c. the poorest’s income
shares fall in the early stages of growth.
d. income concentration
relative to a 45-degree line.
Answer: D
24. A period of rapid
population growth between a preindustrial, stable population characterized by
high birth and death rates and a later, modern, stable population marked by low
fertility and mortality is known as
a. demographic transition.
b. population maturity.
c. demobilizing
population.
d. birth-death
transformation.
Answer: A
25. The _______________ is
the ratio of the non-working population (under 15 years old and over 64 years
old) to the working-age population.
a. labor force
participation rate.
b. per capita population
ratio.
c. population transition.
d. dependency ratio.
Answer: D
26. A stationary
population is when population growth is
a. increasing at an
increasing rate.
b. decreasing.
c. zero.
d. 100%.
Answer: C
27. The Essay on the
Principle of Population was written by
a. The World Bank.
b. Thomas Robert Malthus.
c. Julian Simon.
d. Abraham Lincoln.
Answer: B
28. Malthus’s theory was
that population
a. increased
proportionally to economic growth.
b. increased geometrically,
outstripping food supply, which grew arithmetically
c. increased stagnantly
with food supply and economic development.
d. increased
disproportionately, surpassing agricultural production.
Answer: B
29. The development of
high-yielding varieties (HYVs) of wheat and rice is known as
a. the agribusiness
revolution.
b. farming system theory.
c. the Green Revolution.
d. agri-R&D.
Answer: C
30. The total fertility
rate (TFR) is
a. the total number of
children born in a country in a given year divided by labor
force.
b. the number of children
born to the average woman during her reproductive
years.
c. the number of births in
a country divided by total population in a given year.
d. the number of women age
15-45 in a country divided by total population.
Answer: B
31. A production function
a. shows the dependency
output of the working population.
b. depicts the
relationship between input and output.
c. states the relationship
between products and income distribution.
d. is a function of
natural resources in a country.
Answer: B
32. Disguised unemployment
is
a. when marginal revenue
productivity of labor is zero.
b. the same as seasonal
unemployment of LDC agricultural.
c. the rigid factor
proportions in LDC agriculture and industry.
d. due to capital
formation and the level of technology remaining constant.
Answer: A
33. The Keynesian remedy
for unemployment is to
a. decrease aggregate
demand.
b. reduce tax rates or
lower interest rates.
c. increase government
spending.
d. decrease private
consumption and investment.
Answer: C
34. The emigration of
highly-skilled people from the developing countries is known as
a. the brain drain.
b. human capital
deterioration.
c. productivity.
d. labor degradation.
Answer: B
35. Which of the following
was a socialist country?
I Holland.
II Soviet Union.
III China.
IV India
a. I and II only.
b. II and III only.
c. III and IV only.
d. I and IV only.
Answer: B
36. Joseph Schumpeter is
the exceptional economist who links the entrepreneur to
a. oligopolistic
capitalism.
b. resource management.
c. innovation.
d. land and labor.
Answer: C
37. Progress that meets
the needs of the present without compromising the ability of future
generations to meet their
own needs is
a. the tragedy of commons.
b. sustainable
development.
c. net primary
productivity (NPP).
d. the impossibility
theorem.
Answer: B
38. Many environmental
resources are public goods, which are characterized by
a. rivalry and exclusion
in consumption.
b. nonrivalry and
non-exclusion in consumption.
c. rivalry but non
exclusion in production.
d. nonrivalry but
exclusion in usage.
Answer: B
39. The greenhouse effect
is the phenomenon by which
a. biological diversity is
dominant in agricultural production.
b. the globe’s water
pollution affects plankton.
c. the earth’s atmosphere
traps infrared radiation.
d. climatic changes occur
naturally in the forest.
Answer: C
40. The Montreal Protocol,
signed in 1987 and strengthened in 1990,
a. attains the global
optimal level of common property resource.
b. relies on
internationally tradable emission permits.
c. minimizes free riders
of public goods.
d. reduces ozone depletion
through the cutting of chlorofluorocarbon
production.
Answer: D
41. Monetary policy
affects the ________ and ________.
a. reserve, unemployment.
b. money supply, interest
rate.
c. taxes, exchange rate.
d. stock price, minimum
wage.
Answer: B
42. The Reserve bank of
India and the Federal Reserve
a. are central banks.
b. are branches of
commercial banks.
c. use fiscal policy to
influence GDP.
d. loan money to most of
LDC commercial banks.
Answer: A
43. If people with higher
incomes pay a higher percentage of income in taxes, the income tax
structure is
a. progressive.
b. regressive.
c. value-added taxes
(VAT).
d. excise taxes.
Answer: A
44. When the financial
system lacks the capability of making judgements about investment
opportunities due to
asymmetric information, leading to potentially bad credit risks lending is
subject to
a. adverse selection.
b. moral hazard.
c. social goods.
d. hyperinflation.
Answer: A
45. An annual summary of a
country’s international economic and financial transactions is
a. the capital account.
b. the international
balance of payments statement.
c. the long term current
account.
d. the trade account.
Answer: B
46. The IMF is an agency
charged with providing
a. technical assistance to
stock market and financial market problems.
b. loans for post-World
War II reconstruction.
c. short-term credit for
international balance of payments deficits.
d. bonds denominated in
U.S. dollars as a loan to LDCs.
Answer: C
47. Economic growth can be
measured by:
a) The CPI
b) The CBI
c) GDP
d) MPC
Answer: C
48. In a boom:
a) Unemployment is likely
to fall
b) Prices are likely to
fall
c) Demand is likely to
fall
d) Imports are likely to
fall
Answer: A
49. To boost economic
growth the government is most likely to:
a) Increase interest rates
b) Increase taxation rates
c) Provide incentives to
invest
d) Provide incentives to
save
Answer: C
50. Economic growth can be
seen by an outward shift of:
a) The Production
Possibility Frontier
b) The Gross Domestic
Barrier
c) The Marginal
Consumption Frontier
d) The Minimum Efficient
Scale
Answer: A
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