Test Bank for Economics of Development, 7th Edition

Chapter 2 : Measuring Economic Growth and Development MULTIPLE CHOICE 1. GNP or GDP divided by total population provides a measure of: a. the wellness index. c. per capita income. b. the gap between the rich and poor. d. the poverty index. ANS: C DIF: Easy TOP: Measuring Economic Growth REF: 24 MSC: Factual 2. More than three-quarters of Angola’s national income is derived from: a. cotton. c. rubber trees. b. oil. d. tourism. ANS: B DIF: Easy TOP: Measuring Economic Growth REF: 24 MSC: Factual 3. In 2009, Bangladesh’s GNP was 9 percent higher than its GDP; this occurred due to the fact that: a. large numbers of Bangladeshi men and women work abroad. b. Bangladesh is rich in ore and mineral deposits. c. Bangladesh is subject to frequent and unpredictable changes in weather patterns. d. foreign investment has been robust in the country. ANS: A DIF: Easy TOP: Measuring Economic Growth REF: 24 MSC: Factual 4. A country’s nominal GNP for a given year is defined as the total market value of: a. labor plus capital plus technical change. b. all final goods and services produced. c. all final plus intermediate goods and services produced. d. all final goods and services consumed. ANS: B MSC: Factual DIF: Medium REF: 25 TOP: Measuring GDP 5. One of the problems in measuring GDP is that family farm production of food for personal consumption is not included; this is illustrated by the problem of calculating Cambodia’s GDP where unpaid family workers represent: a. 75 percent of the labor force. c. 33 percent of the labor force. b. 57 percent of the labor force. d. 9 percent of the labor force. ANS: C MSC: Factual DIF: Easy REF: 25 TOP: Measuring GDP 6. In some nations, illegal activities may even be included when calculating GDP; this is most notable in Afghanistan where the GDP includes: a. military expenses. c. money laundering. b. child trafficking. d. poppy production. ANS: D MSC: Factual DIF: Easy REF: 25 TOP: Measuring GDP 7. A criticism of using GDP to measure growth is that it does not include “social bads”; these include all of the following EXCEPT: a. crime. c. inflation. b. pollution. d. congestion. ANS: C MSC: Applied DIF: Medium REF: 25 TOP: Measuring GDP 8. In order to effectively compare levels of GDP per capita across countries, it is necessary to convert GDP per capita into a: a. common currency. b. series of stocks and bonds. c. time-line series illustrating business cycles. d. GNP per capita. ANS: A DIF: Easy REF: 27 TOP: Exchange-Rate Conversion Problems MSC: Factual 9. Most economists agree that an effective way of comparing income levels between countries around the world is through the use of: a. employment statistics. c. foreign investment. b. GDP divided by GNP. d. purchasing power parity. ANS: D DIF: Medium REF: 27 TOP: Exchange-Rate Conversion Problems MSC: Factual 10. The human development index is a composite of three basic measures of human welfare. Which of the following is NOT a component of the human development index? a. life expectancy c. infant mortality rate b. dollars of income d. years of schooling ANS: C DIF: Medium REF: 27 TOP: Exchange-Rate Conversion Problems MSC: Applied 11. When world GDP (2009) is calculated by converting each nation’s GDP into a common currency using market exchange rates, world output by low- and middle-income economies account for: a. 17 percent. c. 58 percent. b. 29 percent. d. 67 percent. ANS: B DIF: Medium REF: 27 TOP: Exchange-Rate Conversion Problems MSC: Factual 12. For which of the following countries is the divergence between GNP per capita measured at official exchange rates and at purchasing power parity (PPP) likely to be largest? a. Japan c. Brazil b. United States d. Ethiopia ANS: D DIF: Medium REF: 32 TOP: Economic Growth Around the World MSC: Applied 13. Based on Maddison’s research, with an annual world income growth rate of 1.3 percent, average income doubles in: a. 21 years. b. 30 years. c. 55 years. d. 90 years. ANS: C DIF: Easy REF: 32 TOP: Economic Growth Around the World MSC: Factual 14. According to Maddison, rapid economic growth in the world’s per capita income as we know it began around the year: a. 1000. c. 1820. b. 1492. d. 1914. ANS: C DIF: Medium REF: 32 TOP: Economic Growth Around the World MSC: Factual 15. The 1980s are often referred to as “the lost decade” in: a. Asia. c. Scandinavia. b. the Middle East. d. Latin America. ANS: D DIF: Easy TOP: Economic Growth: 1970–2010 REF: 36 MSC: Factual 16. Since the year 2000, economic performance in sub-Saharan Africa has improved; this can be attributed to all of the following reasons EXCEPT for: a. improved economic policies and management. b. more democratic and accountable governments. c. a return to state-directed economic policies. d. new technologies. ANS: C DIF: Medium TOP: Economic Growth: 1970–2010 REF: 36 MSC: Factual 17. According to economists, the objective of economic growth is to: a. increase happiness. c. increase development. b. provide more choices. d. decrease corruption. ANS: B DIF: Medium REF: 38 TOP: What Do We Mean by “Economic Development”? MSC: Factual 18. The total number of Millennium Development Goals established in the year 2000 were: a. 5. c. 10. b. 8. d. 18. ANS: B DIF: Easy TOP: Millennium Development Goals REF: 46 MSC: Factual 19. All of the regions will meet Target 1 (to halve the number of poor) EXCEPT: a. Europe and Central Asia. c. sub-Saharan Africa and South Asia. b. the Middle East and North Africa. d. South America. ANS: C DIF: Easy TOP: Millennium Development Goals REF: 46 MSC: Factual 20. The Easterlin paradox concerns itself with the study of: a. b. c. d. wealth. happiness. environmental damage caused by development. the demise of the developed nations at the expense of the rapidly developing ones. ANS: B DIF: Easy TOP: Is Economic Growth Desirable? REF: 50 MSC: Factual SHORT ANSWER IDs and Paired-Concept Questions These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them. 1. Gross national product (GNP), gross domestic product (GDP) ANS: Answer will vary 2. Exchange rate conversion method, nontraded goods ANS: Answer will vary 3. GNP, net economic welfare ANS: Answer will vary 4. Economic development, capabilities ANS: Answer will vary 5. HDI, GNP per capita ANS: Answer will vary 6. MDGs, economic progress ANS: Answer will vary 7. Happiness, economic growth ANS: Answer will vary 8. Sen, Easterlin ANS: Answer will vary