Economic Growth and Development: A Comprehensive Guide for University Students

Question 1

The concept of 'human capital' primarily refers to:

Accepted Answer

The knowledge, skills, and capabilities possessed by the workforce

Answer

The physical infrastructure and machinery used in production

Answer

The natural resources available to an economy

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The financial capital invested in businesses

Question 2

According to the 'dependency theory', which factor is seen as a significant obstacle to economic growth in developing countries?

Accepted Answer

Exploitation by developed economies

Answer

Inadequate domestic savings and investment

Answer

Ineffective government policies

Answer

Cultural barriers to entrepreneurship

Question 3

The 'Kuznets curve' is a theory that suggests a relationship between:

Accepted Answer

Economic growth and income inequality

Answer

Economic growth and technological progress

Answer

Income inequality and technological advancement

Answer

Economic growth and government expenditure

Question 4

The term 'Dutch Disease' is commonly used to describe:

Accepted Answer

The negative economic consequences of a sudden influx of natural resource wealth

Answer

The positive economic impact of international trade on developing economies

Answer

The challenges associated with economic growth in post-industrial societies

Answer

The environmental consequences of unsustainable development practices

Question 5

How does international trade impact economic development?

Accepted Answer

International trade can stimulate economic growth by introducing new technologies and expanding market opportunities.

Answer

International trade can hinder economic growth by increasing competition from foreign firms.

Answer

International trade has minimal impact on economic development.

Answer

International trade can contribute to income inequality within countries.

Question 6

Which of the following is not typically a characteristic of a developing country?

Accepted Answer

High literacy rates

Answer

Low average income per person

Answer

Predominance of subsistence farming

Answer

High infant mortality

Question 7

What is the primary focus of the Solow-Swan model?

Accepted Answer

Identifying the long-term factors that influence economic growth

Answer

Explaining short-term fluctuations in economic activity

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Analyzing the role of government in economic development

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Assessing the effects of trade policies on economic growth

Question 8

What is the core principle of the theory of comparative advantage?

Accepted Answer

Countries should specialize in producing and exporting goods where they have a relative advantage in efficiency.

Answer

Countries should protect their domestic industries from foreign competition through tariffs and subsidies.

Answer

Free trade is always mutually beneficial for all participating countries.

Answer

International trade is a zero-sum game, where one country's gains come at the expense of another.

Question 9

Which of the following factors is NOT considered a crucial determinant of economic growth and development?

Accepted Answer

Government taxation policies

Answer

Accumulation of capital

Answer

Technological advancements

Answer

Availability of natural resources

Question 10

According to the Harrod-Domar growth model, which factor is identified as the primary driver of long-term economic growth?

Accepted Answer

Saving rate

Answer

Capital-output ratio

Answer

Technological advancements

Answer

Investments in education and training

Question 11

The Solow residual represents:

Accepted Answer

The contribution of technological progress to economic growth.

Answer

The difference between potential and actual GDP.

Answer

The rate of capital accumulation.

Answer

The level of human capital.

Question 12

According to the Harrod-Domar model, sustained economic growth can be achieved primarily through:

Accepted Answer

Maintaining a high savings rate

Answer

Rapid population increase

Answer

Implementing import substitution policies

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Substantial government spending reductions

Question 13

An example of a negative externality that can impede economic growth is:

Accepted Answer

Increased pollution levels

Answer

Government subsidies

Answer

Investments in quality education

Answer

Adoption of free trade agreements

Question 14

The theory of 'dynamic comparative advantage' suggests that countries can:

Accepted Answer

Develop new industries and comparative advantages over time

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Specialize solely in industries where they have a static advantage

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Benefit from international trade regardless of their economic conditions

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Shield their domestic industries through protectionist measures

Question 15

The concept of 'inclusive growth' emphasizes:

Accepted Answer

Benefits of economic growth that extend to all segments of society

Answer

Economic growth that minimizes environmental impact

Answer

Economic growth driven primarily by private sector initiatives

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Economic growth based on the exploitation of natural resources

Question 16

How do institutions like property rights and the rule of law contribute to economic growth and development?

Accepted Answer

They create a clear and predictable framework for economic activity, reducing uncertainty and encouraging long-term investment and growth.

Answer

They primarily benefit developed economies by enforcing contracts and protecting property rights.

Answer

They hinder economic growth by creating barriers to entry and innovation.

Answer

They have no significant impact on economic growth and development.

Question 17

Which of the following factors is **not** recognized as a determinant of economic growth?

Accepted Answer

Geographic location

Answer

Investment in physical capital

Answer

Technological advancement

Answer

Social stability

Question 18

The Solow growth model attributes long-term economic expansion primarily to:

Accepted Answer

Innovations in technology

Answer

Growth in population

Answer

Increased government expenditures

Answer

Increased foreign investments

Question 19

Which scenario illustrates a positive externality stemming from economic progress?

Accepted Answer

Enhanced infrastructure

Answer

Degraded natural resources

Answer

Widened economic disparities

Answer

Diminished health outcomes

Question 20

Sustainable development endeavors to:

Accepted Answer

Harmonize economic expansion with environmental preservation

Answer

Maximize immediate economic gains

Answer

Guarantee social equity and justice

Answer

Promote unrestrained technological advancements

Question 21

The Human Development Index (HDI) serves as a measure of:

Accepted Answer

Well-being and societal progress

Answer

Economic prosperity and growth

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Environmental sustainability

Answer

Educational attainment

Question 22

The Phillips curve depicts the relationship between:

Accepted Answer

Inflation and unemployment

Answer

Economic growth and income inequality

Answer

Government spending and taxation

Answer

Interest rates and exchange rates

Question 23

Inclusive economic growth is vital for sustainable development. Explain why, highlighting the specific advantages it brings to society.

Accepted Answer

Inclusive economic growth ensures that the benefits of economic progress are shared equitably among all citizens.

Answer

Inclusive economic growth focuses solely on maximizing GDP growth, disregarding how the benefits are distributed.

Answer

Inclusive economic growth has no direct impact on sustainable development, as it is solely concerned with economic objectives.

Answer

Inclusive economic growth is primarily driven by increased consumption levels, which can lead to environmental degradation.

Question 24

Which of the following is widely recognized as a key factor in fostering economic growth and development?

Accepted Answer

Investment in infrastructure and human capital

Answer

Protectionist trade policies

Answer

High inflation

Answer

Stagnant technological progress

Question 25

Which of the following is an example of an export-led growth strategy?

Accepted Answer

Encouraging domestic businesses to produce and sell goods and services in international markets

Answer

Imposing tariffs on imported goods

Answer

Promoting import substitution industries

Answer

Subsidizing domestic consumption

Question 26

Which of the following is a common characteristic of less developed countries (LDCs)?

Accepted Answer

A higher proportion of the population employed in agriculture

Answer

Low levels of economic inequality

Answer

Well-developed financial markets

Answer

Advanced manufacturing capabilities

Question 27

Which of the following is a potential benefit of foreign direct investment (FDI) for developing countries?

Accepted Answer

Access to new technologies, capital, and expertise

Answer

Guaranteed return on investment

Answer

Complete economic independence

Answer

Elimination of foreign debt

Question 28

Which of the following is a challenge to economic development in developing countries?

Accepted Answer

Inadequate infrastructure (e.g., transportation, energy)

Answer

Political stability

Answer

Abundant natural resources

Answer

Highly educated population

Question 29

Which of the following is a policy tool used by governments to stimulate economic growth?

Accepted Answer

Fiscal stimulus (e.g., tax cuts, increased government spending)

Answer

Monetary tightening

Answer

Trade embargoes

Answer

Price controls

Question 30

Which of the following is a factor that can contribute to income inequality in a country?

Accepted Answer

Disparities in education, skills, and access to resources

Answer

Equal distribution of wealth

Answer

Progressive taxation

Answer

Government subsidies for the poor

Question 31

What is NOT a primary determinant of economic growth?

Accepted Answer

Natural Disasters

Answer

Technological Progress

Answer

Natural Resources

Answer

Human Capital

Question 32

According to the Solow growth model, which factor is primarily responsible for sustained economic growth over the long run?

Accepted Answer

Technological Progress

Answer

Increased Capital Accumulation

Answer

Population Growth

Answer

Natural Resource Abundance

Question 33

Which of the following is a potential benefit of international trade for developing countries?

Accepted Answer

Access to New Markets and Products

Answer

Job Losses in Domestic Industries

Answer

Increased National Debt

Answer

Dependence on Foreign Imports

Question 34

Which of the following is a contributing factor to income inequality?

Accepted Answer

Differences in Education and Skills

Answer

Progressive Taxation

Answer

Government Welfare Programs

Answer

Universal Healthcare

Question 35

Which of the following is a characteristic typically associated with developing countries?

Accepted Answer

Lower Life Expectancy

Answer

Strong Financial Institutions

Answer

Advanced Technology

Answer

Higher GDP per Capita

Question 36

What is a primary goal of economic development?

Accepted Answer

Improved Living Standards

Answer

Environmental Degradation

Answer

Reduced Literacy Rates

Answer

Increased Military Spending