Economic Development

Topics: Household income in the United States, Gross domestic product, Economics Pages: 18 (4931 words) Published: October 8, 2014

Development Economics: 01:220:339:01 ¤ Rutgers University ¤ Professor Ira Gang Prerequisites: Intermediate Microeconomics, Intermediate Macroeconomics, EconometricsEmail: gang at Include 339 in the subject line¤ Course Materials Home ¤ Lecture Schedule, Exam Dates, Readings, Problems ¤ Requirements and Grading ¤ Learning Goals ¤ Exams, Rules, Advice ¤ Sample Exam Questions ¤ Course Structure & Prerequisites Sample Test Questions for Development Economics 339 Below are a set of sample test questions taken from previous exams in Development Economics 339. The answers are indicated by the *. Please note that it is possible that questions may have the * in the wrong place. You should think through all of these.

Also, these are only sample questions. They are put here because students often think it is helpful to see past exams. The fact that these are here does not represent a commitment that questions on your exam will be like these or on the same subject matter. This is especially so because the subject matter and organization of the course has recently been adjusted. In addition, as the material covered between exams changes semester to semester, the questions here are not broken into specific exams.

1. A supply side vicious circle of poverty suggests that poor nations remain poor because a. saving remains low b. investment remains low c. there is a lack of effective government d. all of the above e.* a and b above

2. The International Comparisons Project, which used purchasing power parity rates rather than market exchange rates, has found that the real standard of living in many less developed countries (LDCs) is even lower than indicated by their dollar per-capita income. a. true b.* false

3. As incomes rise there tends to be a shift of labor from the services sector to the industrial sector. a. true b.* false

4. Which of the following is not typically an element in the structural change that accompanies development? a.* increase in the share of agriculture in GDP (gross domestic product) b. increase in manufacturing as a share of GDP c. increase in urbanization d. All of the above changes accompany development

5. The essence of Engel's law is that as family incomes rise a. the savings rate increases b.* the proportion of income spent on food declines c. expenditure on food declines d. proportion of income spent on luxuries declines

6. Economic growth measures the
a. growth of productivity b. increase in nominal income c.* increase in output d. none of the above

7. Non-traded goods do not enter measured GDP because
a. they are intermediate goods b.* they are not traded in the market c. there is no value-added in the production of such goods d. their value is not captured by the exchange rate method of conversion to a common unit

8. The concept of opportunity cost is based upon the principle of a. need b. consumption c.* scarcity d. profit

9. Which of the following is an INCORRECT statement about a budget constraint a. Points on a budget constraint represent combinations of the goods that exactly use up income b. Points within the budget constraint represent combinations of the goods that do not use up all the income. c.* If points A and B lie on the budget constraint, we can deduce that people will be indifferent between the two d. If the price of one good decreases, all else the same, the budget constraint will swivel or rotate outward

10. When the manufacturer of power looms expands, there are forward linkage effects due to a. lost employment in the hand-loom sector b. increased incomes of workers that manufacture looms c.* increased output of woven cloth made by the power looms d. increased demand for electric motors

11. Economic growth is necessary and sufficient to eradicate most of absolute poverty. a. true b.* false

12. Income level or GDP is criticized as an indicator of development mainly because it takes no account of the distribution...
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