Development Economics at ICEF

Midterm exam

April 2, 2018

Part I: Multiple choice questions.

Please read the instructions: Circle the right answer for each question. Allow about 2 minutes per
question. When you are done, turn in Part I in exchange for Part II. No breaks are permitted. Good
luck!

The correct answer to each question yields 6 points. A penalty of 1 point applies to wrong answers.

Фамилия, Имя:____________________________________________
1.
1. The primary purpose of development economics is to explain
a. Development of economics
b. How the human race has developed
c. How to develop a habit to economize
d. Income differences between societies
e. Cultural differences between societies

2. According to Harrod-Domar model, a higher savings rate

a. Will increase the long-run consumption level
b. May both increase and decrease the long-run consumption level
c. Will decrease the long-run consumption level
d. Will change only the short-run consumption level
e. Will change neither long-run nor short-run consumption level

3. According to Solow model, a higher savings rate

a. Will increase the long-run consumption level
b. May both increase and decrease the long-run consumption level
c. Will decrease the long-run consumption level
d. Will change only the short-run consumption level
e. Will change neither long-run nor short-run consumption level

4. A faster population growth rate reduces per-capita income growth…

a. in both Harrod-Domar and Solow models
b. in Harrod-Domar but not in Solow model
c. in Solow but not in Harrod-Domar model
d. Neither in Harrod-Domar nor in Solow models

5. According to Kremer’s “Population growth and technological change”, a correlation between

territory size and population density was observed before
a. Christ
b. Great geographic discoveries
c. Industrial revolution
d. World War II
e. Collapse of the Soviet Union
6. According to Kremer’s “Population growth and technological change” theory, Eurasia became
more prosperous than other continents because of
a. availability of suitable crops and animals
b. absence of malaria
c. large territory
d. free city experience
e. access to sea

7. The “Big Push” theory assumes that there are many industries to reflect the idea that…
a. consumers have “love of variety”
b. output of one industry is complementary to output of others
c. empirically, there are indeed many industries
d. one industry cannot affect aggregate outcomes

8. The term “O-ring” used by Michael Kremer was originally inspired by

a. a fiction book
b. an Olympic sport
c. a sex toy
d. a spacecraft
e. another model in Economics

9. The “self-discovery” model by Hausmann-Rodrik helps explain why Bangladesh exports…

a. Sweaters but not carpets
b. Textiles but not automobiles
c. Shirts but not computers
d. Rice but not oil
e. The model has nothing to do with export patterns

10. Hausmann-Rodrik’s self-discovery theory predicts that increasing the length of protection of
intellectual property rights from zero to infinity will ________ social welfare
a. increase
b. reduce
c. first increase, then reduce
d. first reduce, then increase
e. have no effect on
11. According to the theory of Simon Kuznets,
a. Economic growth lowers inequality
b. Economic growth increases inequality
c. Inequality slows down economic growth
d. Economic growth first increases, and then decreases inequality
e. Growth and inequality are not related to each other

12. Inequality is believed to have had a major impact on growth in

a. Africa
b. North America
c. South America
d. Europe
e. China

13. The Gini coefficient provides a measure of

a. the level of poverty
b. the level of relative inequality
c. disguised unemployment
d. the rate of GDP growth
e. the rate of population growth

14. If a country reduces the average family size from 5 to 2 children, the population growth will
a. Stop immediately
b. Continue for another 5-10 years
c. Continue for another 20-30 years
d. Continue for another 50-100 years
e. Continue for uncertain period, depending on local conditions

15. The fastest rate of population growth occurred in

a. XIX century
b. 1920s
c. 1960s
d. 1990s
e. 2010s