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9.6  Economic Development

1) Economists have found that as a nation's per capita real Gross Domestic Product (GDP) increases,

A) the rate of population growth declines.

B) the rate of population growth experiences dramatic increases.

C) there is no effect on population growth.

D) the rate of population growth increases at the same rate as economic growth.

2) All of the following are listed in the text as being keys to economic development EXCEPT

A) a system of property rights.

B) an educated population.

C) an open economy.

D) a higher level of protectionism.

3) What did Malthus say about population growth?

A) Population growth is the key to a nation's economic growth.

B) Population growth is not a problem if food production keeps up, and Malthus predicted that it would.

C) Population growth is a huge problem if housing and medical care don't also increase.

D) The population would grow faster than food supplies, which would be a recipe for disaster.

4) Have Malthus' predictions about population growth come true?

A) No, because modern birth control has limited population growth in all nations.

B) Yes, as evidenced by the famine and food shortages affecting every nation today.

C) No, because the world's food supply has grown much more rapidly than Malthus foresaw.

D) Yes. The world's food supply, measured by calories per person, continues to fall.

5) The three stages of economic development include

A) the agriculture stage, the manufacturing stage, and the service sector stage.

B) the computerized stage, the agriculture stage, and the manufacturing stage.

C) the feudal stage, the agriculture stage, and the totalitarian stage.

D) the agriculture stage, the manufacturing stage, and the socialist stage.

6) What occurs in the second stage of economic development?

A) Most of the labor force works in agriculture.

B) The service sector comes to the forefront.

C) The manufacturing sector declines in importance.

D) Manufacturing gains in importance and employs a large portion of the labor force.

7) Economists have determined that there are four factors that seem to strongly affect a nation's rate of economic development. Which is NOT one of these four factors?

A) Establishing a system of property rights

B) Developing an educated population

C) Supporting current industries and the jobs they provide instead of adopting new technology that brings disruptive social changes

D) Limiting the extent to which the government imposes trade barriers

8) The study of factors that contribute to the economic growth of a country is known as

A) natural resource economics.

B) entrepreneurial economics.

C) development economics.

D) savings economics.

9) The study of factors that contribute to the economic development of a country is

A) population growth economics.

B) development economics.

C) the theory of technological advancements.

D) the new technology theory.

10) As more economic development occurs,

A) technological progress slows.

B) capital accumulation decreases.

C) the population growth rate decreases.

D) the population growth rate increases.

11) Which of the following is NOT a stage of development that modern rich nations have gone through?

A) Service stage

B) Agricultural stage

C) Manufacturing stage

D) Inflation stage

12) To raise economic development, developing countries should

A) focus on their comparative advantage.

B) focus on producing service goods.

C) produce goods that are capital intensive and not labor intensive.

D) not focus on economic growth.

13) To encourage economic development a country should do all of the following EXCEPT

A) invest in human capital.

B) limit the amount of imports allowed into the country.

C) allow creative destruction to run its course.

D) establish a system of property rights.

14) Creative destruction refers to

A) the destruction of the government system which limits economic growth.

B) the movement from an agricultural society to a service economy.

C) the mechanism for establishing property rights.

D) the creation of new jobs and economic growth after destroying old jobs.

15) Trade between countries should be

A) encouraged for developed countries but not for developing countries.

B) encouraged for both developed and developing countries.

C) discouraged for developed countries but encouraged for developing countries.

D) discouraged for both developed and developing countries.

16) Which of the following factors will NOT increase economic development?

A) Increasing the amount of education in the population.

B) Establishing a system of property rights.

C) Creative destruction where old jobs, companies and industries are destroyed.

D) Increasing the amount of protectionism.

17) The term "creative destruction" refers to

A) the process by which immigrants build a new life in their country of destination.

B) the process by which new jobs are created and old ones destroyed.

C) the effects of population growth on the environment.

D) All of the above are correct.

18) An economy that is an active participant in international trade is

A) an egalitarian economy.

B) a closed economy.

C) an economy whose currency value fluctuates widely.

D) an open economy.

19) Research indicates that

A) countries with lower tariff rates experience higher rates of economic growth.

B) countries with lower tariff rates experience lower rates of economic growth.

C) there is no relationship between the level of tariff rates and economic growth.

D) countries with higher tariff rates experience higher rates of economic growth.

20) The concept of an open economy means that

A) imports should be limited while exports should be expanded.

B) a nation's borders are open to flows of imports and exports.

C) exports should be controlled but imports should be allowed in without restriction.

D) imports and exports should be restricted.


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