Chapter (3) Questions

Chapter (3) MCQs

1. The classic post-World War II literature on economic development has been dominated by
a. four complementary strands of thought
b. four competing strands of thought
c. four separate strands of thought
d. none of the above
2. ………………. Theories viewed development as growth
a. Linear stages
b. structural change
c. International-dependence revolution
d. Neoclassical, free market counterrevolution
3. Rostow’s Stages of Growth are related to
a. Linear stages of growth model
b. Theories and Patterns of structural change.
c. International-dependence revolution.
d. Neoclassical, free market counterrevolution.
4. Harrod-Domar Growth Model is sometimes referred to as the
a. SY model
b. GD model
c. AK model
d. None of the above
5. ………….. is a theory of economic development, according to which a country passes
through sequential stages in achieving development.
a. Stages-of-growth model of development
b. Harrod-Domar growth model
c. The Lewis Theory of Development
d. None of the above
6. Stages-of-growth model of development is associated with the American economic
historian
a. Amartya Sen
b. Walt W. Rostow
c. Robert Lewis
d. None of the above
7. According to Walt W. Rostow, It is possible to identify all societies, in their economic
dimensions, as lying within one of ………….. categories
a. 4
b. 5
c. 6
d. 7
8. According to Walt W. Rostow, Traditional Society is characterized by
a. Development of mining industries
b. Increasing industrialization
c. Subsistence economy
d. High proportion of employment in service sector
9. According to Walt W. Rostow, greater than 75% of labor are in agriculture sector in
a. Traditional Society
b. Societies in Transitional stage
c. Societies that Drive to Maturity
d. Societies that have High mass consumption

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10. According to Walt W. Rostow, Level of investment should be raised to at least 10% of
national income to ensure self-sustaining growth in …………………. Stage
a. Transitional
b. Take off
c. Drive to Maturity
d. High mass consumption
11. According to Walt W. Rostow, Transitional stage is characterized by
a. High levels of agriculture
b. Development of mining industries
c. Increasing industrialization
d. Increase in levels of technology utilized
12. According to Walt W. Rostow, take-off stage requires about ….. years of intensive growth
a. 10-20
b. 30-40
c. 20-30
d. 15-25
13. According to Walt W. Rostow, Growth becomes self-sustaining in ………….. stage
a. Transitional
b. Take off
c. Drive to Maturity
d. High mass consumption
14. According to Walt W. Rostow, drive to maturity stage is characterized by
a. High levels of agriculture
b. Development of mining industries
c. Increasing industrialization
d. Increase in levels of technology utilized
15. it was argued, advanced countries had all passed the stage of
a. The preconditions for take-off into self-sustaining growth.
b. The take-off.
c. Drive to Maturity
d. High mass consumption
16. The economic mechanism by which more investment leads to more growth can be
described in terms of the ………………. growth model.
a. Solow
b. Lewis
c. Harrod-Domar
d. None of the above
17. Harrod-Domar growth model states that the growth rate of gross domestic product
depends …………….. on the national net savings rate
a. Directly
b. Randomly
c. Inversely
d. None of the above
18. Harrod-Domar growth model states that the growth rate of gross domestic product
depends …………….. on the national capital-output ratio
a. Directly
b. Randomly
c. Inversely
d. None of the above
19. ……………….. is a ratio that shows the units of capital required to produce a unit of output
over a given period of time.
a. Capital-output ratio
b. Net savings ratio
c. Capital-investment ratio
d. Gross savings ratio
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20. ………. Is Savings expressed as a proportion of disposable income over some period of time.
a. Capital-output ratio
b. Net savings ratio
c. Capital-investment ratio
d. Gross savings ratio
21. According to Harrod-Domar model, ………. is defined as the change in the capital stock
a. Net saving
b. Net investment
c. Net capital
d. None of the above
22. According to Harrod-Domar model, ∆𝐾 =
a. 𝒄∆𝒀
b. 𝑌∆𝑐
c. 𝑘∆𝑌
d. None of the above
23. More saving and investment is ……………… condition for accelerated rates of economic
growth
a. Sufficient
b. Necessary
c. Unnecessary
d. None of the above
24. ………………. focuses on the transformation from traditional subsistence agriculture to a
more modern manufacturing and service economy.
a. Linear stages
b. Structural change
c. International-dependence revolution
d. Neoclassical, free market counterrevolution
25. ……………… is a well-known representative examples of the structural-change approach
a. Amartya Sen’s Capabilities approach
b. Harrod-Domar Growth model
c. The Lewis Theory of Development
d. None of the above
26. ……………… is a theory of development in which surplus labor from the traditional
agricultural sector is transferred to the modern industrial sector
a. Amartya Sen’s Capabilities approach
b. Harrod-Domar Growth model
c. Lewis two-sector model
d. None of the above
27. …………….. is the excess supply of labor over and above the quantity demanded at the
going free-market wage rate.
a. Unemployed labor
b. Surplus labor
c. Discouraged labor
d. None of the above
28. In the Lewis two-sector model of economic development, surplus labor refers to the
portion of the rural labor force whose marginal productivity is ……………
a. Zero
b. Negative
c. Positive
d. Zero or negative
29. In the Lewis model, A traditional sector in the underdeveloped economy is
a. Agriculture
b. Industrial
c. Mining
d. None of the above
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30. In the Lewis model, A modern sector in the underdeveloped economy is
a. Agriculture
b. Industrial
c. Mining
d. None of the above
31. In the Lewis model, the agriculture sector in the underdeveloped economy is
a. overpopulated rural subsistence sector
b. wages with a given premium over a fixed average subsistence level
c. positive marginal labor productivity
d. all of the above
32. In the Lewis model, the supply curve of rural labor to the modern sector is considered to
be …………
a. Perfectly inelastic
b. Perfectly elastic
c. Relatively inelastic
d. Relatively elastic
33. Lewis model is criticized for assuming that real urban wages are …………….
a. Constant
b. Rising
c. Declining
d. None of the above
34. Lewis makes assumptions about the traditional sector which includes
a. surplus labor
b. rural workers share equally in the output
c. rural real wage is determined by the average and not the marginal product of labor
d. all of the above are correct
35. In the Lewis model, the modern-sector capital stock is allowed to increase as a result of
the
a. Transformation of labor from agriculture sector to industrial sector
b. Reinvestment of profits by industrial capitalists
c. Efficiency of industrial sector
d. All of the above is correct
36. In the Lewis model, The point where the marginal product of rural labor is no longer zero
is called
a. Breakeven point
b. Shutdown point
c. Lewis turning point
d. None of the above
37. The Lewis model is criticized in that
a. The rate of labor transfer in the modern sector is proportional to the rate of modern-
sector capital accumulation.
b. surplus labor exists in rural areas while there is full employment in the urban areas
c. competitive modern-sector labor market
d. all of the above is criticisms of Lewis model
38. Empirical structural-change analysts emphasize ………… constraints on development.
a. Domestic
b. International
c. both domestic and international
d. none of the above is correct
39. according to structural-change analysts, The domestic constraints on development
include
a. access to external capital
b. access to international trade
c. country's resource endowment
d. all of the above are domestic constraints
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40. according to structural-change analysts, The international constraints on development
include
a. access to technology
b. physical and population size
c. government policies and objectives.
d. None of the above
41. “government policies and objectives” is one of the ……………… domestic constraints on
development according to structural-change analysts
a. Economic
b. Institutional
c. Political
d. None of the above
42. “physical and population size” is one of the ……………… domestic constraints on
development according to structural-change analysts
a. Economic
b. Institutional
c. Political
d. None of the above
43. international-dependence models view developing countries as beset by ……….. rigidities
a. institutional
b. political
c. economic
d. all of the above
44. ……………….. is the reliance of developing countries on developed-country economic
policies to stimulate their own economic growth.
a. Dependence
b. Dominance
c. Colony
d. None of the above
45. ……………. mean that the developing countries adopt developed-country systems to
maintain economic growth.
a. Dependence
b. Dominance
c. Colony
d. None of the above
46. …………………….. is a situation in which the developed countries have much greater power
than the less developed countries in decisions affecting important international economic
issues
a. Dependence
b. Dominance
c. Colony
d. None of the above
47. …………….. assumes that underdevelopment exists in developing countries because of
continuing exploitative policies of former colonial rulers toward less developed countries.
a. The neocolonial dependence model
b. The false-paradigm model
c. The dualistic-development thesis
d. None of the above
48. The developing countries are called …………… in The neocolonial dependence model
a. the center
b. the periphery
c. the potential
d. none of the above

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49. in The neocolonial dependence model, Underdevelopment is seen as an ………… induced
phenomenon
a. internally
b. externally
c. independently
d. none of the above
50. in the linear-stages and structural-change theories, Underdevelopment is seen as an
……………… induced phenomenon
a. internally
b. externally
c. independently
d. none of the above
51. ………………… states that developing countries have failed to develop because their
development strategies have been based on an incorrect model of development.
a. The neocolonial dependence model
b. The false-paradigm model
c. The dualistic-development thesis
d. None of the above
52. The false paradigm model attributes lack of development to
a. Insufficient resources
b. Insufficient savings ratio
c. inappropriate advice from rich country economists.
d. All of the above
53. ………………… is the coexistence of two situations or phenomena that are mutually
exclusive to different groups of society.
a. Correlation
b. Covariance
c. Dualism
d. None of the above
54. The International-Dependence theories place more emphasis on
a. accelerate the growth of GDP as the principal index of development.
b. Capabilities as a core for development
c. international power imbalances
d. all of the above
55. weaknesses of Dependence theories include
a. give no insight into how countries initiate and sustain development.
b. the actual economic experience of developing countries that have pursued
revolutionary campaigns has been mostly negative.
c. Both of the above are correct
d. None of the above is correct
56. ……………………. Means closed economy that attempts to be completely self-reliant
a. Dependent
b. Dominated
c. Autarky
d. All of the above are the same
57. …………….. argues that markets are efficient and any government intervention is
counterproductive.
a. The free market approach
b. The public choice theory
c. The market-friendly approach
d. All of the above

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58. Free-market analysis suggests that
a. Government interventions is needed heavily in markets
b. an unregulated market performs better than one with government regulation.
c. Mixed economy works better than unregulated one
d. None of the above
59. ……………….. emphasizes inherent government failure and the self-interested behavior of
public officials.
a. The free market approach
b. The public choice theory
c. The market-friendly approach
d. All of the above
60. ………………….. The theory that self-interest guides all individual behavior and that
governments are inefficient and corrupt because people use government to pursue their
own agendas.
a. The free market approach
b. The public choice theory
c. The market-friendly approach
d. All of the above
61. ……………… recognizes market imperfections, and hence a limited but important role for
government through nonselective interventions
a. The free market approach
b. The public choice theory
c. The market-friendly approach
d. All of the above
62. ………………….. is a growth model in which there are diminishing returns to each factor of
production but constant returns to scale
a. Solow neoclassical growth model
b. Harrod-Domar growth model
c. Lewis Two-Sector model
d. None of the above
63. Traditional Neoclassical Growth Theory conclude that
a. Market price allocation is usually more efficient than intervention.
b. State-owned enterprises have not fulfilled their promise and have been inefficient.
c. Incentives must be stressed
d. All of the above are correct
64. To maintain economic growth, it is important to
a. Accumulate capital
b. Population to grow
c. Get Technological progress
d. All of the above are important
65. ………………… is Increasing a country's stock of real capital
a. Capital accumulation
b. Neutral technological progress
c. Laborsaving technological progress
d. Capital-saving technological progress
66. To increase the production of capital goods necessitates a …………. in the production of
consumer goods.
a. Boost
b. Reduction
c. Stop
d. None of the above

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67. ................... means that Higher output levels achieved with the same quantity or
combination of all factor inputs.
a. Capital accumulation
b. Neutral technological progress
c. Laborsaving technological progress
d. Capital-saving technological progress
68. ……………….. means that The achievement of higher output using an unchanged quantity of
labor inputs as a result of some invention
a. Capital accumulation
b. Neutral technological progress
c. Laborsaving technological progress
d. Capital-saving technological progress
69. ………………. Is a Technological progress that results from some invention or innovation
that facilitates the achievement of higher output levels using the same quantity of inputs
of capital.
a. Capital accumulation
b. Neutral technological progress
c. Laborsaving technological progress
d. Capital-saving technological progress
70. …………………. Is a Technological progress that raises the productivity of capital by
innovation and invention.
a. Labor-augmenting technological progress
b. Capital-augmenting technological progress
c. Neutral technological progress
d. None of the above

# Ans. # Ans. # Ans. # Ans. # Ans.

1 B 15 B 29 A 43 D 57 A
2 A 16 C 30 B 44 A 58 B
3 A 17 A 31 A 45 A 59 B
4 C 18 C 32 B 46 B 60 B
5 A 19 A 33 A 47 A 61 C
6 B 20 B 34 D 48 B 62 A
7 B 21 B 35 B 49 B 63 D
8 C 22 A 36 C 50 A 64 D
9 A 23 B 37 D 51 B 65 A
10 A 24 B 38 C 52 C 66 B
11 B 25 C 39 C 53 C 67 B
12 C 26 C 40 A 54 C 68 C
13 A 27 B 41 B 55 C 69 D
14 D 28 D 42 A 56 C 70 B

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