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Questions in this quiz (35)
1According to the Harrod-Domar model of economic growth:
- AGrowth is driven by savings
- BGrowth is driven by investment into education
- CGrowth is driven by social changes, favorable for entrepreneurship
- DGrowth is driven by escaping the effect of declining terms of trade and the Dutch disease
- EGrowth is driven by copying foreign technology
2To key policy recommendation of the "Big Push" model is this:
- AGovernments should foster linkages with other economies through trade and foreign investment
- BGovernments should undertake massive investments in diverse industrial sectors around the country
- CGovernments should invest into research and development
- DGovernments should interfere in their economies as little as possible
- EGovernments should encourage competition among domestic producers
3According to the Solow-Swan model, an economy at a steady state:
- ADoes not produce any output year-to-year
- BProduces low quantities of output year-to-year
- CProduces high quantities of output year-to-year
- DProduces the same quantity of output year-to-year
- ENone of the above
4The Lewis model relied on an assumption that:
- ARural communities do not foster entrepreneurship as much as urban communities
- BIn rural communities labor is less productive than in urban communities
- CIn rural communities capital is less productive than in urban communities
- DRural communities possess traditional social safety nets and other valuable social capital
- EEconomic contributions of rural communities to growth depend on whether they export their produce
5According to the Endogenous Growth model:
- AGovernment must conduct technological research, to ensure continued economic growth
- BGovernment must attract technology through foreign investment to ensure economic growth
- CGovernments must support private investment into technological research to ensure growth
- DGovernment must protect "infant industries" in manufacturing to produce new technologies
- EGovernment must not get involved in the economy to produce best growth results
6The Oil Crises of 1970's have shown that:
- AColonial patterns of development have left resource-dependent countries economically vulnerable
- BThe IMF would have to transplant economic policies employed in post-war Europe to the Third World
- CThird World growth patterns diverged: Latin America stagnated, while East Asia began rapid growth
- DThe Modernization approach to growth failed to produce economic progress in the Third World
- EWalt Whitman Rostow was right about the key patterns of economic growth
7 The main reason for the failure of Import Substitution Industrialization in South America is:
- APolitical entrenchment of "infant industries"
- BUnwillingness of banks in industrialized countries to lend to South American governments
- CDeclining terms of trade vis-a-vis the developed countries
- DThe Dutch disease
- ERapid urbanization
8 By definition, corruption involves:
- AMisuse of public resources
- BBreaking of a trust relationship
- CNo more than three participating parties
- DVictimization of small and medium enterprises
- EA combination of the above
9Which type of corruption is usually the easiest to notice:
- APrivate sector
- BBureaucratic
- CPolitical
- DNone of the above
- EA combination of the above
10In what way might corruption affect talent allocation:
- ATalented people may not want to work for the government to avoid corruption of the public sector
- BCorruption might burden the education system, making universities graduate fewer students
- CCorruption might divert talented people away from value adding fields into profitable civil service
- DCorruption might increase the population of lawyers in a country
- ETalented people might not invest in capital and Research and Development
11In the course of fighting Bureaucratic corruption in a poor country it's best:
- ATo increase fines for bribe givers and takers
- BTo educate people about the evils of corruption
- CTo invest in the quality of the anti-corruption police
- DTo allow services to be provided my multiple civil servants
- ETo increase fines first, shortly followed by investments into the quality of police
12Which institutions make it most difficult for voters to punish individual corrupt politicians:
- AOpen-list Concensus Parliamentary
- BWestminster Parliamentary
- CClosed-list Concensus Parliamentary
- DPresidential
- EA combination of the above (B/C)
13Inequality affects growth because:
- AInequality eliminates credit and insurance markets for the poor
- B(a) Plus, inequality reduces incentives to educate offspring
- C(a) Plus, inequality reduces the market size for agricultural commodities
- DUnequal countries redistribute more, leading to low levels of investment
- EUnequal countries experience more frequent political victories by the Left
14It may be difficult to beak out of a poverty trap if:
- AIncome distribution is highly unequal: incremental learning is unlikely to reward in an unequal society
- BIncome distribution is highly unequal: a poor Median Voter demands redistribution choking off growth
- CIncome distribution is highly unequal: capital and insurance markets fail the poor
- DIncome distribution is highly unequal: the rural population is too backwards to be productive
- EA combination of the above (a/c)
15True or false: the rich are usually in favor of some redistribution of income:
- AFalse: the rich can afford to buy all the goods and services they need privately
- BTrue: inequality leads to crime and social unrest, which are bad for business
- CFalse: the rich cannot overcome collective action problems, related to helping the poor
- DTrue: the rich want to get insured in the case an external shock changes their financial status
- EA combination of the above (b/d)
16Intra-personal redistribution is NOT designed to:
- ASolve free-riding among the poor
- BReduce costs of investing, relative to the private capital market
- CSolve collective action problems among the rich
- DAlleviate market failures in insurance markets
- EEnsure that people do not under-save for their future needs
17What is the key reason for inter-personal redistribution of income by government?
- ATo eliminate free-riding among the rich
- BTo eliminate free-riding among the poor
- CTo reduce costs of investing, relative to the private capital market
- DTo ensure that people do not under-save for their future needs
- ENone of the above
18Universal insurance schemes solve:
- AAdverse selection problem and moral hazard problem
- BAdverse selection problem only
- CMoral hazard problem only
- DNeither adverse selection nor moral hazard problem
- EDepends on the age-group of the insured individuals
19A lump sum tax is:
- AAnalytically convenient
- BNot prone to distort supply and demand
- CCharacterized by a strong regressive component
- DPractically difficult to implement
- EAll of the above
20Principle-agent problems among voters and politicians, combined with tax progressiveness:
- ALead to more redistribution in Westminster, rather than Concensus democracies
- BLead to less redistribution in Westminster, rather than Consensus democracies
- CLead to more redistribution in Westminster, rather than in Presidential democracies
- DLead to less redistribution in Westminster, rather than in Presidential democracies
- EA combination of the above
21Multiplier effect of a fiscal stimulus is likely to be stronger:
- AWhen economy is close to full employment
- BWhen stimulus is implemented by a Left-wing party
- CIn the presence of a currency board
- DIn the presence of a large national debt
- EA combination of the above (b/c)
22Fiscal adjustment is effective (and produces no significant economic contraction):
- AWhen economy is in a recession and adjustment is revenue-based
- BWhen country is governed by the Left and has no IMF assistance program in place
- CWhen economy is expanding and adjustment is revenue based
- DWhen country is governed by the Right and has almost no national debt
- ENone of the above
23Concensus parliamentary institutions tend to produce larger national debts, because:
- AUnder such institutions budgeting faces Collective action problems
- BUnder such institutions budgeting is most likely to be done by spending ministers
- CStrategic deficit is more likely under concensus parliamentary institutions
- DPork-barrel politics are more likely under concensus parliamentary institutions
- EA combination of the above (a/b)
24Budgeting related collective action problems become worse in the presence of:
- APoverty
- BEthnic fragmentation
- CLarge electoral thresholds
- DSmall district magnitudes
- EA combination of the above
25Which statement is false?
- AAffecting money supply via discount (repo) rates can cause irresponsible lending
- BAffecting money supply via reserve requirements can create uncertainty for bankers
- COpen market operations can lead to loss of confidence in domestic currency
- DQuantitative easing is liable to create financial bubbles in emerging economies
- ENone of the above
26A benevolent social planner:
- ACould control supply of money
- BCould not control supply of money
- CCould control supply of money if facing no need to win elections
- DCould control supply of money in the presence of an Independent central bank
- EA combination of the above
27In Middle Ages inflation was generally low, because:
- AThe was little economic activity in Middle Ages
- BRulers maintained strict control on the amount of coins minted
- CPeople would shift the use of gold form unit of account to store of value as inflation set in
- DThe amount of gold was limited
- EA combination of the above (c/d)
28Which is not a required feature of an Optimal Currency Area?
- ACommon currency
- BHigh intra-regional capital and trade flows
- CIntra-regional labor mobility
- DA regional risk-sharing mechanism
- EA similar business cycle across region's countries
29The British pound floats, because:
- AThe Bank of England is famous for its independence
- BThe stakes of elections in Westminster systems are high
- CThe pound has historically been a global reserve currency
- DBritish firms manufacture mostly branded and sophisticated products
- EA combination of the above
30Direction of international trade flows:
- ASeems to validate Heckscher-Ohlin Theorem (HOT)
- BSeems to validate Gravity Model of Trade (GMT)
- CSeems to validate GMT regionally and HOT globally
- DSeems to validate HOT regionally and GMT globally
- ENone of the above
31Debates about protectionism acquire partisan dimension:
- AIn the presence of full factor mobility
- BIf a country exports labor-intensive goods
- CIf a country exports capital-intensive goods
- DIn the presence of restricted factor mobility
- EAlways
32The orientation of the political Right towards trade liberalization should be:
- AAlways positive
- BAlways negative
- CPositive in capital-abundant countries only
- DPositive in labor-abundant countries only
- EIdiosyncratic
33Which industry prefers pegged exchange rates the most?
- AImporters of luxury yachts
- BExporters of bananas
- CConstruction companies
- DExporters of crude oil
- EImporters of automobiles
34Who makes trade policy decisions in Presidential countries:
- AThe president
- BThe legislature
- CThe prime-minister
- DMinister of the economy
- EA combination of the above (a/b)
35In a Westminster parliamentary system companies most likely to receive government support:
- AAre located in politically safe regions
- BAre located in marginal districts
- CAre spread over a large number of districts
- DAre located in districts represented by senior legislators
- EA combination of the above
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- Quiz on PE retake, created by Šarūnas as on 12/06/2017.
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- Šarūnas as
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