Economic Development - 1

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1 Economic growth is shown on a production possibility curve as a :
a movement along the same curve.
a shift of the entire curve to the right.
a shift of the whole curve to the left.
new curve being drawn.
2 Real GDP is
Money GDP adjusted by changes in the size of a nation's population.
Monwey GDP adjusted for changes in the level of prices.
Money GDP adjusted for changes in the level of output.
Money GDP adjusted for the effect of production externalities (e.g. pollution).
3 The national accounts of a nation show the following information :



YearGDP ($billions)
(Market prices)		CPIGDP ($billions)
(real)
1$500100$500
2$550110$550
3$660 --- ---

Which of the following is true?
The inflation rate in Year 3 was 20% and real GDP remains at $550 billion.
The inflation rate was 10% and economic growth was 10%.
Not enough information is given in the question.
Inflation was 10% and real GDP is $605 billion
4 An increase in productivity means
an increase in the output / capital ratio
an increase in the output / labour ratio
an increase in the capital / output ratio
an increase in the labour / output ratio
5 Economic growth is made easier through :
replacing capital equipment regularly.
capital widening.
capital deepening.
increasing output.
6 Adding to a nation's stock of capital is called :
depreciation.
increasing gross investment.
mechanisation.
increasing net investment.
7 An example of infrastructure provided by the public (or Government) sector is :
providing old age pensions.
extending a nation's road network.
foreign aid.
increasing the size of the armed forces.
8 Capital deepening, when there has been no improvement in technology, means :
the owners of capital receive higher incomes.
the amount of capital used in production increases faster than the increase in output from firms.
the increase in output from firms is less than the increase in production by firms.
the amount of labour used in production increases faster than the amount of capital used in production.
9 Capital widening means :
increasing the size of a firm's workforce relative to its existing stock of capital.
increasing the amount of capital available per worker.
increasing the amount of capital available to the labour force, at the same as the labour force grows.
having more capital available in rural areas.
10 Improving the level of ''human capital'' in the labour force can be assisted by :
decreasing a nation's birth rate.
increasing a nation's death rate.
decreasing a nation's death rate.
providing greater funding to the education system.
11 If the productivity of a nation's workforce increases, then :
the amount of output per worker increases
the amount of inputs per worker increases.
the amount of output per worker decreases.
the amount of capital used in production must have increased.
12 Structural change in an economy means :
greater involvement of the government sector in production.
changes in the distribution of income within an economy.
greater foreign investment in a nation's economy.
one sector of a nation's economy is growing faster than other sectors of the economy.
13 Which of the following is most likely to be a characteristic of a developing country?
Increasing equality of incomes across the population.
a low proportion of the population employed in the agricultural sector.
Low income per capita.
Increasing foreign investment.
14 If a developing country has a narrow export base, this means :
the value of the nation's currency in terms of the US dollar will fall.
most production within the economy is consumed domestically.
exports are made up of a small range of goods and/or services.
the nation has a small coastline.
15 An example of an externality that is not recorded in a nation's Gross Domestic Product is :
the provision of better health services to the general population by the government.
Pollution that results from increased production.
Increased foreign investment.
Increased spending by households.
16 If a nation wishes to stop its population from increasing :
it must encourage women to have, on average, only 2.1 children.
it must introduce a ''one child per family'' program.
it must not allow migration to occur.
there is nothing the nation can do.
17 The United States of America has about 5% of the world's population. The USA consumes what percentage of world income?
5%
10%
20%
30%
18 ''All the world's developed countries are in the world's cool, temperate zones. Look at Europe; at the USA, look at Japan: they all get snow in winter.'', a friend of yours says. Which of the following is true?
People can produce more when the weather is cooler.
Countries in the tropical zones of the world are lazy.
The statement is based on implicitly racist views, as most of the people living in tropical climactic regions are not of European ancestory.
Since many of the nation's in the world's tropical zones were once colonies of developed nations, underdevelopment is the result of 19th century imperialism.
19 A nation with an ''absolute advantage'' in the production of a good or service is able to
produce that good or service only with the assistance of government support (usually in the form of tariffs).
has more resources available to produce that good or service than another country.
produce more of that good or service than another country.
produce that good or service more efficiently (e.g. produce more output per unit input) than another country.
20 A nation has a ''comparative advantage'' in the production of a good or service if
it can produce the good or service for a lower opportunity cost than can another country.
it has higher quality resources available for production than another country.
government's have placed restrictions on imports, to develop the industry.
market conditions have temporarily altered (because of crop failure for example in a neighbouring country), allowing the nation to increase its exports.

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