Deck 19: Development Economics

Question 1

In reality, overall growth and income for the poorest are:

A) highly positively correlated, but not perfectly.
B) uncorrelated.
C) highly negatively correlated, but not perfectly.
D) slightly positively correlated.

Answer 1

highly positively correlated, but not perfectly.

Question 2

An example of how economic growth might not lead to economic development is:

A) the rate of literacy increased among all groups when a nation's economy grew.
B) people had greater social mobility due to the growth experienced in the nation.
C) the average income in a nation increased with greater GDP growth.
D) when a nation's economy grew, the rate of malnutrition among children was relatively constant.

Answer 2

when a nation's economy grew, the rate of malnutrition among children was relatively constant.

Question 3

A country with high economic growth:

A) will definitely experience high economic development.
B) will never experience high economic development.
C) not necessarily will experience high economic development.
D) may not experience economic development without attention paid to policy actions.

Answer 3

may not experience economic development without attention paid to policy actions.

Question 4

Health care improvements often don't happen because:

A) health care facilities exist in most parts of the world.
B) home remedies and traditional village doctors are more affordable.
C) doctors in government clinics have large incentives to practice good medicine.
D) people are generally resistant to improvements in their healthcare systems.

Question 5

Economic development is:

A) about the quality of life for all sectors of society.
B) an indicator of individual poverty.
C) a measurement of available resources.
D) about increases in real GDP only.

Question 6

An example of a capability considered in the capabilities approach would be:

A) being able to afford appropriate healthcare required for a healthy life.
B) to have adequate food and shelter.
C) to be able to afford to travel freely.
D) to have the ability to purchase a luxury item you really want.

Question 7

An example of a capability considered in the capabilities approach would be:

A) earning a livable wage.
B) living free of the fear of violence
C) being able to afford a nice home.
D) to have the ability to purchase an item you really want.

Question 8

The capabilities approach considers:

A) how much total output changes over time in a society.
B) what people can be and how much people can do over time in a society.
C) how much human capital improves over time in a society.
D) how much human capital one society has relative to another.

Question 9

Policies which promote education are central to all of the following except:

A) economic development.
B) economic growth.
C) increasing the capabilities of a society.
D) federal reserve bank's interest rate policy.

Question 10

Health care improvements often don't happen because:

A) they are too expensive to have any significant impact.
B) national health insurance only exists in highly developed countries, like the U.S.
C) doctors in government clinics have no incentive to practice good medicine.
D) home remedies and traditional medicine are generally more expensive.

Question 11

Which of the following would NOT be considered a capability in the capabilities approach?

A) To be able to find secure and meaningful work
B) To be able to afford to travel freely
C) To live free of the fear of violence
D) All of these are considered capabilities

Question 12

About how many people out of 7 billion live on just $1.25 a day in the world?

A) 700 million
B) 500 million
C) 1.5 billion
D) 2 billion

Question 13

Policies which promote improvements in health for a society are central to:

A) economic development.
B) rising health care costs.
C) government deficit spending.
D) government monetary policy.

Question 14

Economic growth focuses on ____________, utility focuses on ____________, and the capabilities approach focuses on __________________.

A) human development; individual pleasure; output
B) output; human development, individual pleasure
C) output; individual pleasure; human development
D) human development, output, individual pleasure

Question 15

In general but not always, economic growth:

A) causes economic development, but development does not cause growth.
B) does not cause economic development, but development causes growth.
C) does not cause economic development, and development does not cause growth.
D) causes economic development, and development causes growth.

Question 16

The Nobel Prize-winning economist from Harvard who developed the capabilities approach is:

A) Amartya Sen.
B) Milton Friedman.
C) John Kenneth Galbraith.
D) Gary Becker.

Question 17

Economic growth is:

A) about the quality of life for all sectors of society.
B) an indicator of individual poverty.
C) a measurement of available resources.
D) the measure of changes in real GDP.

Question 18

What level of daily income is the World Bank's measure of extreme poverty?

A) $1.00
B) $1.90
C) $2.25
D) $3.00

Question 19

The capabilities approach allows us to focus on issues of:

A) poverty, inequality, and human development.
B) income, poverty, and economic growth.
C) human development, capital development, and technological progress.
D) personal happiness, individual pleasure, and pain avoidance.

Question 20

Two of the main focuses on development economics focuses on how countries can promote:

A) health and education.
B) sound monetary policy and education.
C) health and fiscal policy.
D) sound monetary and fiscal policy.

Question 21

National health insurance programs:

A) can increase use of health clinics versus traditional village doctors, who often have no medical training.
B) are usually too costly for developing nations to implement.
C) have solved the problem of providing high-quality care in places like India.
D) are always less efficient than privatized programs.

Question 22

One of the challenges for development economists working in health care is to figure out a way to:

A) force doctors to practice good medicine.
B) mandate through government policy that families must make better health care choices.
C) increase the frequency of preventative medicine, such as immunizing children.
D) have the government get more involved in production of necessary healthcare item.

Question 23

Economic growth is_____________ improved health conditions in a nation.

A) always needed for
B) not necessarily needed for
C) always more important than
D) negatively related to

Question 24

One of the challenges for development economists working in health care is to figure out a way to:

A) give doctors the right incentives to practice good medicine.
B) force families to make better health care choices.
C) influence markets in order to keep the costs of healthcare lower.
D) alter the educational system in order to mandate that a certain number of students go into healthcare fields.

Question 25

The study of health care provision in Delhi, India by Hammer and Das found:

A) doctors often worked at or beyond their knowledge frontier.
B) doctors in public clinics were often more creative in diagnoses and care than doctors in private facilities.
C) unless doctors were intrinsically motivated, no incentive exists for them to provide high quality care.
D) the implementation of national healthcare provisions had strong associations with quality of care.

Question 26

The improved health of a nation can increase:

A) the productivity of workers and economic development.
B) economic growth and malnutrition among children.
C) economic development and illiteracy.
D) productivity of workers and fiscal policy spending.

Question 27

National health care programs are not as effective as they could be because:

A) health care providers tend to have a high absentee rate.
B) traditional Western medicine is largely untrusted in most parts of the developing world.
C) many doctors in clinics do not have sufficient knowledge to properly diagnose patients.
D) patients are not receptive to utilization of modern medicine in most nations.

Question 28

In general, educating workers:

A) does not make them more productive.
B) increases overall economic growth.
C) contributes little to other capabilities.
D) forces them to leave their native country.

Question 29

Between 1999 and 2015, globally the number of children who were not attending school:

A) dropped to less than 16 percent.
B) reduced by half.
C) doubled.
D) dropped to less than 6 percent.

Question 30

In general, educating workers:

A) makes them more productive.
B) does not affect overall economic growth.
C) contributes little to other capabilities.
D) All of these statements are true.

Question 31

In general, each additional year of schooling is worth about:

A) 10 percent more in overall earnings over the course of a lifetime.
B) 5 percent more in overall earnings over the course of a lifetime.
C) 25 percent more in overall earnings over the course of a lifetime.
D) 50 percent more in overall earnings over the course of a lifetime.

Question 32

Doctors in private health care clinics provide better care than those in public clinics because:

A) they are better trained.
B) they have more incentive to practice good medicine.
C) their fixed salary is generally higher than the fixed salaries of public clinic doctors.
D) their facilities are generally much more updated than public facilities.

Question 33

National health insurance programs:

A) can increase use of health clinics versus traditional village doctors, who often have no training.
B) are starting to be implemented in poorer areas like Ghana to increase access to health care.
C) still face challenges in some areas to provide good, high quality care.
D) All of these statements are true.

Question 34

National health care programs are not as effective as they could be because:

A) health care providers tend to have a low absentee rate.
B) public health care clinics often run out of important drugs.
C) doctors rarely diagnose below their knowledge frontier.
D) many doctors in clinics do not have sufficient knowledge to properly diagnose patients.

Question 35

Health care improvements often don't happen because:

A) they are too expensive to implement.
B) doctors overprescribe and drive the cost of health care too high.
C) health care facilities don't exist in some parts of the world.
D) they are too expensive to have any significant impact.

Question 36

People who live in countries with ________ average incomes generally live __________ lives.

A) lower; shorter
B) lower; longer
C) higher; shorter
D) higher; more meaningful

Question 37

One of the challenges for development economists working in health care is to figure out a way to:

A) force doctors to practice good medicine.
B) give incentives to families to make better health care choices.
C) decrease the frequency of preventative medicine, such as immunizing children.
D) All of these statements are true.

Question 38

In terms of economic growth, educated workers are generally:

A) more productive.
B) less productive.
C) less healthy.
D) happier.

Question 39

If average incomes of a nation don't rise over time:

A) improvements in health are impossible.
B) improvements in health are still possible.
C) improvements in health are still very likely.
D) it will have no impact on the nation's ability to improve health.

Question 40

In terms of capabilities, education can be seen as:

A) contributing to better family planning.
B) a factor that reduces income inequality in countries.
C) a feature of more democratic regimes.
D) something that requires a lot of funding, but produces very little return.

Question 41

In many countries, the system of titling is:

A) weak, allowing more and faster investment.
B) weak, slowing economic development.
C) strong, slowing the amount of property transfer.
D) strong, slowing economic growth.

Question 42

With the increase in school attendance throughout the world, the newest challenge for development economists is increasing:

A) availability of education to children.
B) the quality of education to children.
C) the availability of college education.
D) the consistency of education across countries.

Question 43

Most development economists agree that the most basic and important task of any government is to:

A) create a stable political system.
B) provide national health care system.
C) maintain a stable currency.
D) ensure basic education for all citizens.

Question 44

Democracy _______ essential to economic growth and according to the capabilities approach should _______________.

A) is; also be seen as essential to sustaining basic freedoms
B) is not; still be essential in sustaining basic freedoms
C) is not; not be considered as improving lives if it doesn't directly contribute to growth
D) is; not be considered to create capabilities without directly contributing to growth

Question 45

Policies which promote good governance of a society are:

A) based on favoritism.
B) not important to pursue in developing countries.
C) central to economic growth.
D) uncommon in nations with high growth rates.

Question 46

Good governance is:

A) important to economic growth, but not to economic development.
B) important to both economic growth and development.
C) important to economic development, but not to economic growth.
D) not important to either economic growth or development.

Question 47

A major reason for the increase in school attendance by children between 1999 and 2015 throughout the world was:

A) the abolishment of school fees.
B) the creation of labor laws forbidding child labor.
C) an increase in the minimum wages adults could earn.
D) the imposition of legislation that forced children to become educated.

Question 48

Rwanda is a clear example of a country that has:

A) achieved economic growth only after a democratic regime was in place.
B) achieved economic growth without a democratic regime.
C) failed to achieve economic growth without a democratic regime.
D) failed to achieve economic growth, despite having a democratic regime.

Question 49

Economist Douglass North suggests that the term used to describe government bodies, development agencies, and international groups should be:

A) organizations.
B) institutions.
C) agencies.
D) groups.

Question 50

Peruvian economist Hernando de Soto claims the ___________ in Latin America results in "dead capital."

A) weak titling system
B) strong titling system
C) general lack of strong national defense
D) generally weak currencies

Question 51

Economists like Hernando de Soto feel that a ___________ is the key to economic development.

A) strong national defense
B) strong currency
C) strong titling system
D) stable currency

Question 52

Economist Douglass North's definition of institutions:

A) is the rules of the game in a society.
B) is the humanly devised constraints that shape human interactions.
C) includes laws enforced by the government as well as cultural norms.
D) All of these statements are true.

Question 53

Property rights and a strong titling system are seen as important to economic development because they allow:

A) loans to be taken out against the equity of their assets, increasing investment.
B) loans to be taken out without risk, increasing the quality, not quantity, of investment.
C) savers to invest in property and capital.
D) agencies with authority to verify titling to thrive in the economy.

Question 54

China is a clear example of a country that has:

A) achieved economic growth without a democratic regime.
B) achieved economic growth only after a democratic regime was in place.
C) failed to achieve economic growth without a democratic regime.
D) failed to achieve economic growth, despite having a democratic regime.

Question 55

Between 1999 and 2015, throughout the world more children attended school:

A) only in those countries with strong economic growth.
B) only in those countries with free college education.
C) even in countries that did not experience strong economic growth.
D) which contributed to the drop in family cohesiveness in developing countries.

Question 56

The term institutions is commonly used to refer to:

A) government bodies.
B) development agencies.
C) international groups.
D) All of these statements are true.

Question 57

The evidence to support economist de Soto's claim that a strong titling system would lead countries to increase their economic development is:

A) strong and undisputed.
B) mixed and implies that such systems may be important with other factors present.
C) absent, and his claims are unfounded.
D) not important as in economics some theories don't require empirical evidence to be supported.

Question 58

Which of the following has been found to be most effective in improving the quality of education?

A) Training women in the community to offer supplemental lessons
B) Distributing textbooks
C) Providing parents with information about the quality of the children's schools
D) Forcing students to study longer at home

Question 59

It's impossible to sustain economic growth or development in the absence of:

A) a rule of law.
B) improvements in education.
C) membership to world organizations, like the United Nations.
D) income equality.

Question 60

Democracy is ______________ to economic growth.

A) clearly linked and is essential
B) clearly linked and is not essential
C) not so clearly linked, yet seems to be essential
D) not so clearly linked and does not seem to be essential

Question 61

Which of the following industrial policies are effective for developing countries to deal with inflows of capital from overseas?

A) Import substitution, export-led growth, and clustering.
B) Import substitution, export-led growth, and crowding out.
C) Import substitution, government subsidy, and clustering.
D) Market Substitution, government subsidy, and crowding out.

Question 62

The idea behind the traditional industrial policy of import substitution is:

A) to protect infant industries until they can become price competitive in the world market.
B) give certain industries a chance to enter a market and gain efficiencies that companies elsewhere in the world have already gained in that industry.
C) build up home industries to compete with others in the world.
D) All of these statements are true.

Question 63

In terms of industrial policy, clusters refer to:

A) networks of interdependent firms, universities, and businesses that focus on production of a specific type of good.
B) firms in an economy that are so interconnected, when one fails, they all fail.
C) the industries supported in a country practicing export-led growth policy.
D) the industries supported in a country practicing import substitution policy.

Question 64

The "Asian miracle" refers to the:

A) success countries like Japan, South Korea, and Taiwan have had with export-led growth policy.
B) success countries like Japan, South Korea, and Taiwan have had with import substitution policy.
C) fact that countries like Japan and South Korea have had consistent growth despite their failing industrial policies.
D) high growth in countries like Japan and South Korea despite the absence of a democratic government.

Question 65

A problem associated with import substitution as an industrial policy is:

A) it removes the incentive for industries to be efficient.
B) industries are often chosen for political, not economic, reasons.
C) it often stays in place long after it was expected to lapse.
D) All of these are problems associated with import substitution policy.

Question 66

Tools a government might use to pursue industrial policy might be all of the following except:

A) incentives for foreign direct investment.
B) offer tax breaks to firms.
C) investment in research to create more growth.
D) directly manipulate markets in order to control prices.

Question 67

Successful export-led growth policy entails:

A) choosing the "right" industries to invest in.
B) blocking the "right" industries from importing to domestic markets.
C) choosing the "right" incentives to encourage exports.
D) choosing the "right" disincentives to reduce imports.

Question 68

Many Asian countries since the 1980s and 1990s have:

A) supported export-led growth instead of import substitution policies.
B) supported import substitution policies instead of export-led growth.
C) been extremely successful in their attempts at industrial clustering.
D) failed in their attempts at industrial clustering.

Question 69

The traditional industrial policy of import substitution:

A) has been successful for those countries that managed to pick the "right" industries.
B) has been successful for the great majority of countries.
C) is generally unsuccessful in the real world.
D) is used by most countries with some degree of success.

Question 70

A country that has had success with export-led growth policy is:

A) North Korea.
B) South Korea.
C) Russia.
D) Liberia.

Question 71

An example of an industrial policy would be all except:

A) subsidies.
B) trade barriers.
C) tax breaks.
D) interest rate restrictions.

Question 72

When governments choose to favor some industries over others, they undertake:

A) industrial espionage.
B) corporate growth policy.
C) corporate pricing policy.
D) industrial policy.

Question 73

Japan, Singapore, and Taiwan have all:

A) had success with import substitution policy.
B) imitated South Korea's export-led growth policy and failed.
C) imitated South Korea's import substitution policy and failed.
D) had success with export-led growth policy.

Question 74

Something that would not be considered a tool in pursuit of industrial policy would be:

A) incentives for foreign portfolio investment.
B) investment in research.
C) incentives for foreign direct investment.
D) All of these are examples of industrial policies.

Question 75

Industrial policy is an effort by a government to:

A) regulate prices in particular industries.
B) identify the most profitable industries in the world, and adopt them in their country.
C) favor some industries over others.
D) control markets that are industrial.

Question 76

Export-led growth policy involves:

A) favoring industries that export goods over those that only produce domestically consumed goods through high tariffs.
B) investing heavily in industry through tax breaks and export subsidies with the aim of selling goods around the world.
C) encouraging private investment in industries that currently export goods, rather than those expanding domestically.
D) discouraging imports with high tariffs.

Question 77

In reference to industrial policy, networks of interdependent firms, universities, and businesses that focus on production of a specific type of good are called:

A) bundles.
B) clusters.
C) vertical industries.
D) integrated industries.

Question 78

If a government pursues the industrial policy of import substitution, it is:

A) protecting domestic industries until they are efficient enough to compete in the world market.
B) giving consumers incentive to substitute imported goods for those domestically produced.
C) encouraging domestic industries to ship imports to other countries.
D) mandating that imports can only be sold if the domestic economy does not produce that particular good.

Question 79

Realizing the problems with import substitution, some Asian countries have instead:

A) supported export-led growth.
B) become isolationist, like North Korea.
C) practiced contractionary monetary policy.
D) worked to maintain a fixed exchange rate.

Question 80

Governments choose to pursue industrial policy to:

A) raise tax revenue.
B) spur economic growth.
C) create publicly owned companies.
D) regulate the growth of certain industries.