Deck 11: Development Policymaking and the Roles of Market, State, and Civil Society  

Question 1

What are accounting, or "shadow" prices for project appraisal? In what way do they differ from market prices, and why do we need them? Additional question or part of question: How can reference to world prices help countries gauge the real opportunity costs of development projects?

Answer 1

The additional question would depend on supplemental coverage of the ideas of the Little-Mirrlees project evaluation method.

Question 2

Name <> of the ten points of the Washington Consensus. What is missing from this list? Did the Santiago Consensus address what was missing?

Answer 2

Covered in detail in the chapter.

Question 3

Why must projects be appraised? What do we learn from project appraisals?

Answer 3

Discussed in the chapter.

Question 4

The price reflecting the true social opportunity costs of a resource is known as

A)a shadow price.
B)an equilibrium price.
C)a world price.
D) a price index.

Question 5

Which of the following factors has led to poor plan performance?

A)unanticipated changes, such as in terms of trade
B)corruption of government officials
C)foreign firms are less subject to the constraints of the plan than domestic ones
D) all of the above
E) none of the above

Question 6

What is the primary composition/ownership pattern of the private sector in most developing countries?

Question 7

Explain what is meant by market failure.

Question 8

In the Harrod-Domar growth model, if 12.5% of income is saved, the incremental capital output ratio is 2.5 and the rate of depreciation is 4%, what is the implied rate of growth?

Question 9

Development plans have often failed because

A)they have been insufficiently specific about projects.
B)they have overlooked noneconomic considerations.
C)they have been overambitious.
D) All of the above.
E) None of the above.

Question 10

How does the Washington Consensus differ from the Santiago Consensus?

Question 11

Sectors where the development process leads to a more rapid expansion of demand than supply in goods or factor markets are known as

A)the crisis in planning.
B)input-output analysis.
C)bottlenecks.
D) infant industries.

Question 12

Assume a closed economy. Suppose the incremental capital-output ratio is 3, and the depreciation rate is 4%. Using the Harrod-Domar growth equation, if the savings rate is 9%, what will be the rate of growth? What would the savings rate have to be to achieve 5% growth?

Question 13

What is the role of input-output analysis in development planning? What are the strengths and weaknesses of this technique?

Question 14

What economic benefits might a developing country gain by reducing corruption? Discuss only economic benefits and provide examples from specific developing countries.

Question 15

In what ways may social evaluations of costs and benefits differ from those implied by market prices? Explain carefully.

Question 16

In the Harrod-Domar model, if the savings rate is 20% and the incremental capital output ratio is five, abstracting from depreciation, what is the implied growth rate?

Question 17

An example of an institutional requirement for the operation of effective private markets is

A)enforcement of contracts.
B)the ability of government to correctly project trends.
C)the ability of advertisers to influence consumers.
D) All of the above.

Question 18

A plan that sets targets to cover all major aspects of the national economy is known as a/an _____ plan.

A)interindustry
B)complete
C)comprehensive
D) economic

Question 19

As an agent of economic development, in what areas do NGOs have a comparative advantage, compared to governments or markets?

Question 20

An example of a market-facilitating legal practice is

A)clearly established property rights.
B)corruption of government officials.
C)extensive licensing requirements for starting firms.
D) all of the above.
E) none of the above.

Question 21

If the population growth rate is 2%, the incremental capital output ratio is 3, the saving ratio is 24%, and the depreciation rate is 5%, the rate of growth of income is

A)1%.
B)2%.
C)3%.
D) 5%.
E) 8%.

Question 22

If the population growth rate is 2%, the incremental capital output ratio is 3, the saving ratio is 24% and the depreciation rate is 5%, the rate of growth of income per person is

A)1%.
B)2%.
C)3%.
D) 5%.
E) 8%.

Question 23

Which of the following is a rationale for development planning?

A)Government failure
B)Market failure
C)Failure of consumers to understand their preferences
D) All of the above are rationales for development planning.
E) None of the above are rationales for development planning.

Question 24

If the incremental capital output ratio is 3 and the ratio of saving to national income is 9%, according to the Harrod-Domar model the growth rate of income is

A)zero.
B)3%.
C)6%.
D) 12%.

Question 25

In Ecuador, as a share of a firm's revenue, the cost of bribes is highest for

A)micro enterprises.
B)small enterprises.
C)medium enterprises.
D) large enterprises.

Question 26

A shadow price is

A)the price in the previous period.
B)the price in the next period.
C)the social value of a good or service.
D) the market value of a good or service.
E) none of the above.

Question 27

Which of the following is a reason for the failure of development plans?

A)Unreliable data
B)Unanticipated economic disturbances
C)Lack of political will
D) All of the above
E) None of the above

Question 28

Which of the following is not a rationale for development planning?

A)Capital market failures
B)Rent seeking behavior
C)Attitudinal or psychological impact
D) All are rationales for development planning in developing countries.