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Development Economics IIB by Alex Gorashov

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Quiz on Development Economics IIB by Alex Gorashov, created by Alex Gorashov on 24/02/2015.
Alex Gorashov
Quiz by Alex Gorashov, updated more than 1 year ago
Alex Gorashov
Created by Alex Gorashov almost 10 years ago
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Resource summary

Question 1

Question
The Solow model emphasizes the role of which of the following factors of production?
Answer
  • land
  • labour
  • capital
  • natural resources

Question 2

Question
In an exogenous growth model, growth is caused by
Answer
  • capital accumulation
  • government policies
  • human capital accumulation
  • forces that are not explained by the model itself

Question 3

Question
Suppose that two countries share identical levels of total factor productivity, identical labor force growth rates and identical savings rates. According to the Solow model
Answer
  • 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.
  • 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.
  • both countries will have the same growth rates of output per worker, even if they start out with different levels of output per worker
  • 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.

Question 4

Question
In the endogenous growth model, an increase in a worker’s level of human capital
Answer
  • increases the amount of additional human capital she can produce, but does not increase the amount of output she can produce.
  • increases the amount of additional output she can produce, but does not increase the amount of human capital she can produce.
  • increases both the amount of additional human capital she can produce and the amount of output she can produce.
  • increases neither the amount of additional human capital she can produce nor the amount of output she can produce.

Question 5

Question
According to Alesina and Dollar (2000) donor countries tend to allocate more aid to:
Answer
  • recipient countries with a low level of Human Development Index
  • recipient countries that used to be former colonies of the donor and that are not necessarily poor
  • recipient countries with a high level of population
  • none of the previous answers

Question 6

Question
Burnside 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?
Answer
  • controlling for the level of democracy inside the recipient country
  • using a variable that accounts for the type of fiscal policy implemented by the recipient government
  • using a composite index that accounts for the fiscal, monetary and foreign policy
  • controlling for the level of corruption inside the recipient country

Question 7

Question
According to the Harrod-Domar model, an increase in growth rates depends on:
Answer
  • Increase in capital-output ratio
  • Decrease in capital-output ratio
  • Increase in marginal propensity to consume
  • None of the above

Question 8

Question
Without adjusting for "purchasing power parity", Real GDP tends to understate income in developing economies by
Answer
  • Ignoring government deficit spending
  • Omitting non-market transactions
  • Underestimating saving
  • All of the above

Question 9

Question
The Solow Growth Model predicts that
Answer
  • The rich will get richer and the poor will get poorer
  • Rich nations will grow faster than poor nations
  • Poor nations will grow faster than rich nations
  • The rich will get poorer and the poor will get richer

Question 10

Question
If the central prediction of the Solow Growth Model is valid,
Answer
  • Economic freedom as measured by the Heritage Foundation Index will decrease
  • Population growth rates in rich countries will increase
  • Per capita Real GDP differences among nations will increase
  • Per capita Real GDP differences among nations will diminish

Question 11

Question
The new growth theory attempts to explain
Answer
  • the rate of capital accumulation within a country
  • the rate of population growth within a country
  • why there are diminishing returns to capital
  • the factors that determine the size of the Solow residual

Question 12

Question
Lack of investment in strong education and health care systems:
Answer
  • Causes a deterioration in human capital and an increase in physical capital
  • Causes a deterioration in human capital and a decline in labor productivity
  • Increases human capital and a cause a decline in labor productivity
  • Causes a decline in physical capital and a decline in labour productivity

Question 13

Question
According to Burnside and Dollar (2000):
Answer
  • Foreign aid has a positive impact on growth if associated with sound policies but with diminishing returns
  • Foreign aid does not have a positive impact on growth but with increasing returns
  • Foreign aid has always a positive impact on growth but with diminishing returns
  • Foreign aid has a positive impact on growth if associated with sound policies but with increasing returns

Question 14

Question
Per Capita GDP is a good proxy for the growth of a country because:
Answer
  • is negatively correlated with Life expectancy
  • is positively correlated with Infant Mortality
  • is negatively correlated with Adult Literacy
  • none of the above

Question 15

Question
According to Galor and Zeira (1993):
Answer
  • Individuals who inherit less than f work as unskilled but their descendants in future generations will work as skilled workers
  • Individuals who inherit more than f invest in human capital and all their descendants will remain in the skilled labour sector in future generations
  • Individuals who inherit less than g may invest in human capital but after some generations their descendants become skilled workers
  • Individuals who inherit less than f work as unskilled and so are their descendants in future generations

Question 16

Question
If 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:
Answer
  • the same output level as before
  • a higher output level than before
  • the Golden Rule output level
  • a lower output level than before

Question 17

Question
What 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
Answer
  • Bangladesh has adopted a strategy of redistribution with growth
  • absolute poverty is more widespread in Bangladesh
  • the size distribution of income is more unequal in Indonesia
  • growth in Bangladesh is calculated using poverty weights rather than income weights

Question 18

Question
In the Harrod-Domar equation g = s/v, v is defined as
Answer
  • the change in the country’s capital stock
  • the ratio of the country’s capital stock to its output
  • the value of the country’s capital stock
  • none of the above

Question 19

Question
According to the Harrod-Domar model, an increase in growth rates depends on
Answer
  • Increase in marginal propensity to consume
  • Increase in capital-output ratio
  • Decrease in capital-output ratio
  • None of the above

Question 20

Question
In the Solow growth model, if investment exceeds depreciation, the capital stock will ______ and output will ______ until the steady state is attained.
Answer
  • increase; decrease
  • decrease; increase
  • decrease; decrease
  • increase; increase

Question 21

Question
Burnside 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?
Answer
  • using a composite index that accounts for the fiscal, monetary and foreign policy
  • controlling for the level of democracy inside the recipient country
  • using a variable that accounts for the type of fiscal policy implemented by the recipient government
  • controlling for the level of corruption inside the recipient country

Question 22

Question
With perfect income equality the Gini coefficient in a country would be :
Answer
  • 1
  • infinity
  • 0
  • 0.5

Question 23

Question
The concept of Purchasing Power Parity:
Answer
  • is based upon the cost of hamburgers around the world
  • is based upon the nominal exchange rate
  • is based upon the market exchange rate
  • is based upon the cost of the same market basket of goods in different countries

Question 24

Question
Compared to the developed countries, the LDCs have
Answer
  • higher birth rates and lower death rates
  • lower birth rates and lower death rates
  • higher birth rates and higher death rates
  • lower birth rates and higher death rates

Question 25

Question
One 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:
Answer
  • had virtually the same number of households in absolute poverty
  • had virtually the same percentage of households in absolute poverty
  • had virtually the same Human Development Index level
  • none of the above
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