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Development IIB Mid-term
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Questions in this quiz (25)
1According to the Harrod-Domar model, an increase in growth rates depends on:
- Aa. Increase in capital-output ratio
- Bb. Decrease in capital-output ratio,
- Cc. Increase in marginal propensity to consume,
- Dd. None of the above
2Without adjusting for "purchasing power parity", Real GDP tends to understate income in developing economies by
- AA. Underestimating saving
- BB. Ignoring government deficit spending
- CC. Omitting non-market transactions
- DD. All of the above
33. The Solow Growth Model predicts that
- AA. Rich nations will grow faster than poor nations
- BB. The rich will get richer and the poor will get poorer
- CC. The rich will get poorer and the poor will get richer
- DD. Poor nations will grow faster than rich nations
4If the central prediction of the Solow Growth Model is valid,
- AA. Per capita Real GDP differences among nations will increase
- BB. Per capita Real GDP differences among nations will diminish
- CC. Economic freedom as measured by the Heritage Foundation Index will decrease
- DD. Population growth rates in rich countries will increase
5What conclusion can be reached from the following data on income shares?
Percentage of Income Received by
Lowest 40% Highest 20%
Bangladesh 17.3% 45.3%
Indonesia 14.4% 49.4%- AA. absolute poverty is more widespread in Bangladesh
- BB. the size distribution of income is more unequal in Indonesia
- CC. Bangladesh has adopted a strategy of redistribution with growth
- DD. growth in Bangladesh is calculated using poverty weights rather than income weights
6The new growth theory attempts to explain
- AA. the rate of population growth within a country.
- BB. the rate of capital accumulation within a country
- CC. the factors that determine the size of the Solow residual.
- DD. why there are diminishing returns to capital.
7Lack of investment in strong education and health care systems:
- Aa) Causes a deterioration in human capital and a decline in labour productivity;
- Bb) Causes a deterioration in human capital and an increase in physical capital;
- Cc) Increases human capital and a cause a decline in labour productivity;
- Dd) Causes a decline in physical capital and a decline in labour productivity
8According to Burnside and Dollar (2000):
- Aa) Foreign aid has always a positive impact on growth but with diminishing returns;
- Bb) Foreign aid has a positive impact on growth if associated with sound policies but with diminishing returns;
- Cc) Foreign aid does not have a positive impact on growth but with increasing returns;
- Dd) Foreign aid has a positive impact on growth if associated with sound policies but with increasing returns.
- Aa) Foreign aid has always a positive impact on growth but with diminishing returns;
9Per Capita GDP is a good proxy for the growth of a country because:
- Aa) is negatively correlated with Life expectancy;
- Bb) is negatively correlated with Adult Literacy;
- Cc) is positively correlated with Infant Mortality;
- Dd) none of the above
- Aa) is negatively correlated with Life expectancy;
10According to Galor and Zeira (1993):
- Aa) Individuals who inherit less than f work as unskilled but their descendants in future generations will work as skilled workers;
- Bb) Individuals who inherit less than f work as unskilled and so are their descendants in future generations;
- Cc) Individuals who inherit more than f invest in human capital and all their descendants will remain in the skilled labour sector in future generations;
- Dd) Individuals who inherit less than g may invest in human capital but after some generations their descendants become skilled workers;
- Aa) Individuals who inherit less than f work as unskilled but their descendants in future generations will work as skilled workers;
11If a war destroys a large portion of a country's capital stock but the saving rate is unchanged, the Solow model predicts output will grow and that the new steady state will approach:
- AA. a higher output level than before
- BB. the same output level as before
- CC. a lower output level than before.
- DD. the Golden Rule output level
- AA. a higher output level than before
12In the Harrod-Domar equation g = s/v, v is defined as
- AA the value of the country’s capital stock
- BB the ratio of the country’s capital stock to its output
- CC the change in the country’s capital stock
- DD none of the above
- AA the value of the country’s capital stock
13According to the Harrod-Domar model, an increase in growth rates depends on
- Aa. Increase in capital-output ratio
- Bb. Decrease in capital-output ratio,
- Cc. Increase in marginal propensity to consume,
- Dd. None of the above
- Aa. Increase in capital-output ratio
14In the Solow growth model, if investment exceeds depreciation, the capital stock will ______ and output will ______ until the steady state is attained.
- AA. increase; increase
- BB. increase; decrease
- CC. decrease; decrease
- DD. decrease; increase.
- AA. increase; increase
15Burnside and Dollar (2000) state that foreign aid can be effective if allocated where good policies are in place. How do they empirically measure the good policies?
- A(a) controlling for the level of democracy inside the recipient country
- B(b) using a variable that accounts for the type of fiscal policy implemented by the recipient government,
- C(c) using a composite index that accounts for the fiscal, monetary and foreign policy
- D(d) controlling for the level of corruption inside the recipient country.
- A(a) controlling for the level of democracy inside the recipient country
16With perfect income equality the Gini coefficient in a country would be:
- Ainfinity
- B1
- C5
- D0
17The concept of Purchasing Power Parity:
- Aa. is based upon the cost of hamburgers around the world
- Bb. is based upon the cost of the same market basket of goods in different countries
- Cc. is based upon the market exchange rate
- Dd. is based upon the nominal exchange rate
- Aa. is based upon the cost of hamburgers around the world
18Compared to the developed countries, the LDCs have
- Aa. higher birth rates and lower death rates
- Bb. higher birth rates and higher death rates
- Cc. lower birth rates and lower death rates
- Dd. lower birth rates and higher death rates
- Aa. higher birth rates and lower death rates
19One study found that the Gini coefficient for Egypt .403 . was virtually the same as that for Australia .404. From this information one can conclude that Egypt and Australia
- Aa. had virtually the same number of households in absolute poverty.
- Bb. had virtually the same percentage of households in absolute poverty.
- Cc. had virtually the same Human Development Index level.
- Dd. none of the above.
- Aa. had virtually the same number of households in absolute poverty.
20The Solow model emphasizes the role of which of the following factors of production?
- A(a) Land
- B(b) Labour
- C(c) Capital
- D(d) Natural resources
- A(a) Land
21In an exogenous growth model, growth is caused by
- A(a) capital accumulation.
- B(b) government policies.
- C(c) human capital accumulation.
- D(d) forces that are not explained by the model itself.
22Suppose that two countries share identical levels of total factor productivity, identical labour force growth rates and identical savings rates. According to the Solow model
- A(a) the country with the greater initial level of output per worker will grow more rapidly than the country with the smaller initial level of output per worker.
- B(b) the country with the smaller initial level of output per worker will grow more rapidly than the country with the greater initial level of output per worker.
- C(c) both countries will have the same growth rates of output per worker, even if they start out with different levels of output per worker.
- D(d) if both countries start out with different levels of income per worker, both countries may have different growth rates of output per worker, but we cannot be certain which country will have the higher growth rate of output per worker.
- A(a) the country with the greater initial level of output per worker will grow more rapidly than the country with the smaller initial level of output per worker.
23In the endogenous growth model, an increase in a worker’s level of human capital
- A(a) increases the amount of additional human capital she can produce, but does not
increase the amount of output she can produce. - B(b) increases the amount of additional output she can produce, but does not increase the amount of human capital she can produce.
- C(c) increases both the amount of additional human capital she can produce and the amount of output she can produce.
- D(d) increases neither the amount of additional human capital she can produce nor the amount of output she can produce.
- A(a) increases the amount of additional human capital she can produce, but does not
24According to Alesina and Dollar (2000) donor countries tend to allocate more aid to:
- A(a) recipient countries with a low level of Human Development Index,
- B(b) recipient countries that used to be former colonies of the donor and that are not necessarily poor,
- C(c) recipient countries with a high level of population
- D(d) none of the previous answers
- A(a) recipient countries with a low level of Human Development Index,
25Burnside and Dollar (2000) state that foreign aid can be effective if allocated where good policies are in place. How do they empirically measure the good policies?
- A(a) controlling for the level of democracy inside the recipient country
- B(b) using a variable that accounts for the type of fiscal policy implemented by the recipient government,
- C(c) using a composite index that accounts for the fiscal, monetary and foreign policy
- D(d) controlling for the level of corruption inside the recipient country.
- A(a) controlling for the level of democracy inside the recipient country
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- Quiz on Development IIB Mid-term, created by Niamh Ingham on 24/02/2015.
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- Niamh Ingham
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