00Economic development

Final revision
Mohamed Elkomy

01011047511
Matrix center
Part 1 question’s on lecture 3
1: Small differences in growth rates can make a small difference over time. False Huge
2: The difference between 1% growth and 2% growth is 1% difference False 100% difference
3: the Basic formula for compound growth over discrete periods (years) is
A: ( ) B: ( )
C: ( ) D: ( )
4: If you knew that Norway's income per capita in 2020 was $93,900, and that it would be $120,277 in
2027. Use this information to answer questions 24 and 25
1. Norway's average compound growth rate equal
(a) 2% (b) 2.5% (c) 3% (d) 3.6%

r=( ) =r=( ) =3.6%

2: How many years will Norway take to double its level of income?
(a) 19.4 years (b) 23.3 years (c) 28 years (d) 35 years
Doubling time (t) = =19.4
5: : If Senegal's income per capita in 2009 was $1,492, and its historical growth rate was 1% per year.
Assuming that its income continues to grow at 1% per year. Senegal's per capita income 10 years into the
future (in 2019) will equal
(a) 2048 (b) 3142 (c) 2260 (d) 1648
X0 = $1,492 r = 1% = 0.01 t = 10 years
Xt = X0 × (1+r)t = $1,492 × (1+0.01)10= $1,492 × (1.01)10= $1,648
6: Calculating growth rates using these start point data is potentially misleading if either the start or end
year observation is unusually high or low False endpoint data
7: the approach that uses all of the observations in a given time series, rather than relying entirely on the
first and last observations
A: regression analysis B: geometric analyses C: Elkomy analysis D: none of the above
8: the approach that solve the problem of misleading date in calculating growth is
A: regression analysis B: geometric analyses C: Elkomy analysis D: none of the above
9: Economists have been trying to understand the determinants of economic development and the
characteristics that distinguish fast-growing from slower-growing countries F economic growth
10: broad range of factors could be important to growth, including:
A: The amount and type of investment B: Education and Healthcare systems.
C: Natural resources and geographical endowments. D: all of answers are correct
11: economic growth depends on
A: Factor accumulation B: Productivity growth, C: both A and B D: none of the above
12: defined as increasing the size of the capital stock or the labour force.
A: Factor accumulation B: Productivity growth, C: both A and B D: none of the above
13: defined as increasing the amount of output produced by each machine or worker.
A: Factor accumulation B: Productivity growth, C: both A and B D: none of the above
14: Productivity can be increased by
A: Efficiency B: Technological change C: A and B are correct D: none of the above
15: improving the efficiency with which current factors are being used.
A: Efficiency B: Technological change C: A and B are correct D: none of the above

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16: through which new ideas, new machines, or new ways of organizing production can increase growth.
A: Efficiency B: Technological change C: A and B are correct D: none of the above
17: often involves shifting resources from producing one good to another.
A: Efficiency B: Technological change C: productivity growth D: none of the above
18: The process of economic growth in low income countries always corresponds to major structural
shifts in the composition of output, generally from industry to agriculture F agriculture to industry.
19: Growth models give high attention to the process of expanding the labor force F less attention
20: labor is seen as a binding constraint on growth), which is usually assumed to grow in line with the
population. F not seen
21: For the capital stock to grow, the value of new investment must be less than the amount of
depreciation of existing capital F grater
22: the models assume that the key to increasing investment (and the capital stock) is to increase
A: saving B: production C: labor D: money
23: save whatever income they do not consume.
A: Households B: Corporations C: Governments D: Menofia
24: save in the form of retained earnings after distribution of dividends to stockholders.
A: Households B: Corporations C: Governments D: Menofia
25: either add to saving to the extent that they receive tax payments in excess of government current
spending (budget surplus) or diminish from saving if they spend more than tax receipts (budget deficit)
A: Households B: Corporations C: Governments D: Menofia
26: they didn’t understand the meaning of consumption or as we know that Y=C+S but with them Y=S
only
Households B: Corporations C: Governments D: Menofia
‫الضؤال ده للهزار فقط وعلشبن لى حد صرق األصئلو بش انمب المنبيفو دول نبس محترمو وفىق راصنب‬
27: combines all three sources of saving, provides the resources to finance investment.
A: Gross domestic saving B: Gross domestic product C: GNI D: all of the above
28: People prefer to consume later rather than sooner. F sooner rather than later.
29: generating saving and investment is necessary for growth, it is not sufficient. True
30: Changes in world market prices could also affect income. True
31: Sustaining economic growth requires
A: new investment B: investment must be productive C: Both A and B D:none of the above
32: Sustaining economic growth requires generating new investment only False ‫مهم جبي ف األمتحبن‬
Sustaining economic growth requires both generating new investment and ensuring that the investment is
productive.
33: Robert Solow approach is based on an economic model False
Approach is more of an accounting framework based on actual data than an economic model
34: way to explore how factor accumulation and productivity growth affect output and economic growth
is by examining a
A: production function. B: saving function C: investment Function D: none of the above
35: is the function which characterizes how inputs (capital and labor) are combined to produce various
levels of output.
A: production function. B: saving function C: investment Function D: none of the above

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36: common production function is where the horizontal axis shows the amount of capital per worker, and
the vertical axis shows the amount of output per worker. True
37: Combining capital and labor into the single "capital per worker" term is a convenient way to simplify
the analysis, but it also reflects the dominant role that capital has played in thinking on economic growth
over the years. True
38: In most models, insufficient capital is seen as the binding constraint on growth. True
39: Labor is usually assumed to be an abundant supply, based on the observation of unemployed or
underemployed workers True
40: formulation, increasing the amount of capital available for each worker is seen as key to growth. True
41: is meant to measure the contribution to production of efficiency, technology, and other influences on
productivity.
A: TFP B: FTP C: NTP D: SAS
42: From the statistical records of a developing country, GDP growth rate is 5% a year, capital stock
growth is 7% a year, Labor force growth is 2% a year, the share of labor in national income is 60% and
the share of capital in national income is 40%. the total factor productivity (TFP) or Solow residual for
this country equal
A: 0.02 B:0.01 C: 0.03 D:0.04
gY = 0.05 gK = 0.07 gL = 0.02 WL = 0.6 WK = 0.4
 By substituting these figures into equation, we get:
gY = (WK × gK) + (WL × gL) + a
0.05= (0.4 × 0.07) + (0.6 × 0.02) + a
0.05 = 0.028 +0.012 + a
0.05 -0.04+ a
a = 0.05 -0.04 = 0.01 (meaning that TFP growth is 1% per year).
43: according to question 42 TFP growth of total growth equal
A: 0.02 B:0.01 C: 0.03 D:0.2
0.01 / 0.05 = 0.2 = 20%.
44: according to question 42 The growth in the capital stock accounts for total growth equal
A: 0.02 B:0.01 C: 0.56 D:0.2
(0.4 × 0.07) / 0.05= 0.028/0.05 = 0.56 = 56%.
45: according to question 42 The growth in the labor force accounts for total growth equal
A: 0.02 B:0.24 C: 0.56 D:0.2
(0.02 × 0.6) / 0.05 = 0.012/0.05 = 0.24 = 24%.
46: is the part of measured growth that cannot be explained by data on the traditional factors of
production.
A: TFP growth (a) B: B: labor growth C: capital growth D: saving growth
47: In developing countries sources of growth analyses attribute a larger role to capital formation than in
the industrialized country studies. True
48: developing countries have lower levels of capital per worker than the industrialized countries and can
catch up (or converge incomes) through the investment process. True
49: the mobilization of capital remains a major concern of policy makers in developed countries. False
developing countries
Note

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The most rapidly growing developing countries tend to share six broad characteristics.
1. Macroeconomic and Political Stability.
2. Investment in Health and education.
3. Effective Governance and Institutions.
4. Favourable Environment for Private Enterprise.
5. Trade, Openness, and Growth.
6. Favourable Geography.

50: Economic growth depends on all of the following except

(a) Economic Development. (b) Factor Accumulation.
(c) Productivity Growth. (d) Efficiency.
51: A combination of errors in the data, omission of other factors that should be included in the growth
equation, and efficiency gains and changes in technology is; called
(a) Total Factor Productivity. (b) Solow residual.
(c) Measure of our ignorance. (d) All of the Above.
52:. Growth is not the same as development, but it remains central to the development process. True
53: Saving and investment are central, but investments must be productive for growth to proceed. True
54: Growth depends on two processes: the accumulation of assets (such as capital, labor, and land), and
making those assets more productive. True
55: The growth models make assumptions that clearly are not true but are assumed to simplify the
framework and make it easier to hold key concepts and insights, these assumptions are
(a) One type of homogeneous worker. (b) One type of capital good.
(c) One standard product. (d) All of the Above.
56: relates the number of employees and machines to the size of the firm's output.
(a) production function (b) saving Function
(c) investment function . (d) All of the Above.
57: describe the relationship of the size of a country's total labor force and the value of its capital stock
with the level of that country's GDP (total output).
(a) production function (b) saving Function
(c) investment function . (d) All of the Above.
58: • At the most general level, the aggregate production function can be expressed as:
Y=F (K, L)

(a) Y=F (K, L) (b) Y=F (K, S)

(c) Y=F (K, y). (d) Y=F (K, V)
59: Economic growth occurs by increasing either:
(a) The capital stock (b) The size of the labor force
(c) Both A and B . (d) None of the Above.
60: If the average saving rate is 20% and total income is $10 billion, then the value of saving in any year
is:
(a) 2 (b) 3 (c) 4 (d) 5
S = sY= 0.20 × $10 billion = $2 billion.

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Note: We assume that the saving rate s is a constant, which for most countries is between 10% and 40%
(typically averaging between 20% and 25%), although for some countries it can be higher or lower.
61: Two main forces determine changes in the capital stock:
A: New investment B: deprecation C: saving D: Both A and B
62: slowly erodes the value of the existing capital stock over time.
A: New investment B: deprecation C: saving D: Both A and B
Note : We assume here that the depreciation rate is a constant, usually in the range of 2% to 10%.
63: If the total income in a country is $10 billion, saving is $2 billion, the value of the existing capital
stock is $30 billion and the annual rate of depreciation is 3%. The new value of capital stock will equal
A: 31.3 B: 42.5 C: 45.4 D: 46.3
Y= $10 billion S= $2 billion K= $30 billion d=3%=0.03
I=S=$2 billion
K = I - (dk)
K = $2 billion - (0.03 × $30 billion)
$2 billion - $0.9 billion = $1.1 billion
Thus the new value of capital stock is:
$30 billion + $1.1 billion = $31.1 billion
64: If the labor force in a country consists of 1 million people and the population is growing by 2%. the
new value of labor force
A: 31.3 B: 42.5 C: 1.02 D: 46.3
L = 1 million n = 2% = 0.02
L = nL = (0.02 × 1 million) = 20,000 workers
 The new labor force is:1 million + 20,000 = 1.02 million people

Note there are three fixed parameters (d, s, and n), the values of which are assumed to be fixed
exogenously, or outside the system.
Note
K = sY – dK [6]
 This equation states that the change in the capital stock (AK) is equal to saving (SY) minus
depreciation (dK).
65: If Thailand's GDP growth rate is 5% a year, capital stock growth is 3% a year, labor force growth is
2% a year, the share of capital in national income is 70%. The Total Factor Productivity of Thailand
equals
(a) 1% (b) 2.3% (c) 3.2% (d) 5%

66: The main driver of growth in this country is

(a) Capital accumulation (b) Labor accumulation
(c) TFP (d) All of the Above.

67: Which of the following is not a characteristic that is associated with most rapidly growing developing
countries?
(a) An income distribution that is very close to being equal.
(b) Favourable geography.
(c) Favourable environment for private enterprise.

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(d) Trade, openness, and growth.
68: If France's total income is $50 billion, its saving rate is 20%, the value of the existing capital stock is
$100 billion, and the annual rate of depreciation is 5%. Calculate the new value of capital stock.
(a) $5 billion (b) -$4.8 billion (c) $105 billion (d) $95.2 billion
K = sY – dK =50*20% =10 – 100*5%=5 10-5=5 new 100+5=105
69: Deferring current consumption can lead to ……….. Consumption later.
(a) null (b) smaller (c) equal (d) greater
70 The functions describe the relationship of the size of a country's total labor force and the value of
its capital stock with the level of that country's GDP are called
(a) Aggregate Production Functions.
(b) Constant returns to scale production Functions.
(c) Fixed-Coefficient Production Functions.
(d) Neoclassical Production Functions.
71: Gross Domestic Saving is
(a) Households' Saving, (b) Corporations' Saving.
(c) Governments' Saving, (d) All of the Above.

72: Solow’s residual is a combination of errors in the data, omission of other factors that should be
included in the growth equation, and efficiency gains and changes in technology and it is referred to as a
“measure of our ignorance” about the growth process. (True ) TFP
73: The mobilization of capital is a major concern of policy makers in developing countries as they have
lower levels of capital per worker than the industrialized countries. (True )

74: Referring to the above figure out put represented by

A: Isoquants B: curves C: lines d: None of the above
75: are combinations of the inputs (Labor and capital) that produce equal amounts of output
A: Isoquants B: curves C: lines d: None of the above
76: The Fixed-Coefficient Production Function represented by
A: Isoquants B: curves C: lines d: None of the above
77: Only two isoquants are possible, each for a different level of output. False are shown, but a nearly
infinite number of isoquants
78: Fixed-Coefficient Production Functions represented by
A: L shape B: curve C: intersected lines D: None of the above
79: The L-shape of the isoquants is characteristic of a particular type of production function known as
A: complex production Function B: Fixed-Coefficient Production Functions.
C: Mixed production Function D: None of the above

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80: are based on the assumption that K and L need to be used in a fixed proportion to each other to
produce different levels of output.
A: complex production Function B: Fixed-Coefficient Production Functions.
C: Mixed production Function D: None of the above
81: represented in the figure by the slope of the ray from the origin through the vertices (a and b) of the
isoquants.
A: constant capital-labor ratio B: mixed capital-labor ratio
C: varied capital-labor ratio D: None of the above
82: These vertices represent the least cost and most efficient mix of capital and labor to produce a given
quantity of output. True
83: if more workers are added without investing in more capital, output does not rise. In
A: complex production Function B: Fixed-Coefficient Production Functions.
C: Mixed production Function D: None of the above
84: On each isoquant, the most efficient production point is at the corner, where the ……….amounts of
capital and labor are used.
A: minimum B: maximum C: higher D: both B and C
85: in Fixed-Coefficient Production Functions use any more of either factor without increasing the other
is a waste True
86: The production technology showed in the figure also is drawn with
A: increasing return to scale B: decreasing return to scale
C: constant return to scale D: all of the above
87: the core of the Harrod and Domar growth model, which developed primarily to explain the
relationship between growth and unemployment in advanced capitalist societies.
A: The fixed-coefficient, constant-returns-to-scale B: decreasing return to scale
C: increasing return to scale D: None of eh above
88: The Harrod-Domar model has been used extensively in developing countries to examine the
relationship between growth and capital requirements. True
89: In the model, the production function has a very specific form, in which output is assumed to be a
linear function of capital and labor False (only capital).
90: If v = 3 and a firm has $30 million in capital, its annual output would be
A: 20 b:30 c: 10 D:40
91: In the earlier figure, it took $10 million in investment in a new plant and new equipment to produce
$5 million worth of keyboards, implying a capital-output ratio is
A: 2 b:3 c: 1 D:4
92: A larger v implies that more capital is needed to produce the same amount of output. True
93: So, if v = 4, and Y=5 then: K =
A: 20 b:30 c: 10 D:40 v XY = 4 × $5 million = $20 million
94: provides an indication of the capital intensity of the production process.
A: the capital-output ratio B: labor output ratio
C: both A and B D: None of eh above
95: In the basic growth model, this ratio constant across countries for two reason either the countries use different
technologies to produce the same goods or they produce a different mix of goods. False varies

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96: In countries that produce a larger share of capital-intensive products, vis higher than in countries
producing more labor-intensive products. True
97: In practice, as economists move from the v of the model to actually measuring it in the real world, the
observed capital-output ratio can also vary for a third reason: differences in
A: efficiency. B: technology C: production D: adequacy
98: A larger v indicates less-efficient production when capital is not being used as productively as
possible. True
99: A factory with lots of idle machinery and poorly organized production processes has a higher capital-
output ratio than a more- efficiently managed factory. True
100: determine the impact of additional (or incremental) capital on output.
A: INCR B: ICOR C: INIR D: INVR
101: measures the productivity of additional capital, whereas the (average) capital-output ratio refers to
the relationship between a country's total stock of capital and its total national product (K/Y).
A: INCR B: ICOR C: INIR D: INVR
102: • In the Harrod-Domar model, because the capital-output ratio is assumed to remain constant, the
average capital-output ratio is equal to the incremental capital-output ratio, so the ICOR = v. True
103: consume more and make productive investments, and your economy will grow. False Save
104: If the saving (or investment) rate is 24%, the ICOR is 3, and the depreciation rate is 5%, then the
predicted growth rate will equal
A: 4% B:5% C:3% D:2%
s = 24% = 0.24 v=3 d = 5% = 0.05

105: Strengths of the Harrod-Domar Framework are

A: Simplicity B: 2. Estimating Short - run growth rates C: Saving role D: all of the above
106: Weaknesses of the Harrod-Domar Framework are
A: The strong focus on saving. B: Assuming only one sector
C: Capital, labor, and output must all grow at the same rate D: all of the above
107: In the absence of severe economic shocks, the model can estimate expected growth rates in most
countries over long periods False very short periods of time (a few years).
108: saving is necessary for growth, the simple form of the model implies that it is also sufficient False
not sufficient
109: Sustained growth depends both on generating new investment and ensuring that investments are
productive over time True
110: Harrod-Domar Framework assume that we work in 2 sectors false only one sector
Note If n > g, this means that the labor force grows faster than the capital stock. Factually, the saving rate
is not high enough to support investment in new machinery sufficient to employ all new workers .A
growing number of workers do not have jobs and unemployment rises indefinitely.
Note If g >n, the capital stock grows faster than the workforce. This means that there are not enough
workers for all the available machines, and capital becomes idle.

Note IF g = n, either labor or capital is not fully employed and the economy is not in a stable equilibrium.

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111: fixed capital-to-labor, capital-to-output, and labor-to-output ratios, may be reasonably accurate for
short periods of time but always are increasingly inaccurate over longer periods of time. True
112: The fixed-proportion production function does not allow for any substitution between capital and
labor in the production process. True
113: The absence of the ability to produce increasing quantities of output per unit of input.
The simplest way to capture this is to introduce a smaller ICOR, but of course, this would contradict the
idea of a constant ICOR. True
114: we stop using the Harrod - Domar model False still be used until now
115: Model that allow for more flexibility and substitution between the factors of production.
(a) Aggregate Production Functions.
(b) Constant returns to scale production Functions.
(c) Fixed-Coefficient Production Functions.
(d) Neoclassical Production Functions.
116: In the Solow model, the capital-output and capital-labor are
A: Fixed B: vary C: can be both D: none of the above
117: The isoquants in Neoclassical Production Functions are
A: curved B: L-shaped C: can be both D: none of the above
Note that
• Output could be expanded in any of three ways.
1. Constant Returns to Scale: So that a doubling of labor and capital leads to a doubling of output
(point b on isoquant II).
2. Labor-intensive Method: The firm could use more labor and less capital (point c on isoquant II).
3. Capital-intensive Method: The firm could use more capital and less labor (point d on isoquant II).
Note
1: Unless saving is exactly equal capital needed for growth (grow of population) the economy not stable
in the equilibrium (will fall to the edge known as (Knife adage problem)
2: process through which, increase the amount of. Capital per worker (worker have access to more
machines and Saving exceed capital needed. (Capital deepening)
(3) increasing in capital stock just to pace with labor force when saving (sy) is exactly equal (Just enough
to provide capital needed( capital widening )
4:doubling input leads. to increasing In output by more than double (increasing return, to scale)
5: return at investment decline as and capital stock growth (diminishing return to scale )
6) beneficial effect of third party that has larger impact in investment to Capital spill over (positive
externalities
(7)countries with larger (V) grow slower than small (v) Poor Countries can catch up (grow faster than)
rich ( Convergent a debate)
(8) model without relying on assumption of exgenous technological change
(endogenous growth Model)

118: Solow's model assumes a production function with diminishing returns to capital.
A: constant return to scale B: diminishing returns to capital.
C: increasing return to scale D: none of the above

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119: The first equation of the Solow model tells us that labor per worker is fundamental to the growth
process. False capital per worker
120: The process through which the economy increases the amount of capital per worker, k, is called
A: capital deepening. B: capital growing C: capital widening D: None of the above
121: An increase in the capital stock that just keeps pace with the expanding labor force and depreciation
is called
A: capital deepening. B: capital growing C: capital widening D: None of the above
123: the relationship between saving and growth is linear because of diminishing returns to capital in the
production function. False is not linear
124: is a powerful tool for analyzing the interrelationships between saving, investment, population
growth, output, and economic growth.
(a) Aggregate Production Functions.
(b) Constant returns to scale production Functions.
(c) Fixed-Coefficient Production Functions.
(d) Neoclassical Production Functions. (The Solow model)
125: model explain the fact that many of the world's countries have seen steady growth in average
incomes through
A: Technological Change. B: capital change C: production change D: labor change
126: In developing countries, the productivity-enhancing effects of technological innovation have played
a smaller role in driving productivity growth than in developed countries. True
127: Solow model Specified productivity growth as exogenous (that is, determined independently of all
the variables and parameters specified in the model). True
128: Beyond Solow by assuming that the national economy is subject to
A: constant return to scale B: diminishing returns to capital.
C: increasing return to scale D: none of the above
129: means a doubling of capital, labor, and other factors of production leads to more than a doubling of
output
A: constant return to scale B: diminishing returns to capital.
C: increasing return to scale D: none of the above
130: Beyond Solow models can explain continued per capita growth in many countries without relying on
exogenous technological change. True
131: The potential benefits from both of these sources of growth are even greater in endogenous growth
models because of potential positive externalities. True
132: all models are seeking out appropriate new technologies are consistent across all these models. True

133:On each isoquant, the most efficient production point is where

(a) the minimum amounts of capital and labor are used.
(b) the minimum amounts of Capital and maximum amounts of labor are used.
(c) the maximum amounts of capital and minimum amounts of labor are used.
(d) the maximum amounts of capital and labor are used.
134: Sustaining economic growth requires
(a) Generating new investment.

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(b) Ensuring that the investment is productive.
(c) Economic development.
(d) Both (a) & (b).
135: If you know that in Brazil during 2021, the ICOR ratio averaged 2 the investment rate was 48%,
and the depreciation rate was 2% then calculate the predicted growth rate using the Harrod - Domar
framework.
(a) 1% (b) 2% (c) 3% (d) 4%

S=48% V= 2 d=2% 0.22

136: All of the following are from the weaknesses of the Harrod-Domar model except
(a) The Fixed-coefficient production function.
(b) The strong focus on saving.
(c) Knife edge problem
(d) Estimating short-run growth rates.
137: The...... shows that capital accumulation depends on saving, the growth rate of the labor force, and
depreciation.
(a) Basic growth model (b) Harrod-Domar growth model
(c) Neoclassical growth model (d) Fixed-coefficient growth model
138:In the Harrod-Domar modell, the average capital-output ratio is ......... the incremental capital-output
ratio.
(a) lower than (b) equal to
(c) higher than (d) None of the above.
139: The growth models make assumptions that clearly are not true but are assumed to simplify the
framework and make it easier to hold key concepts and insights, these assumptions are
(a) One type of homogeneous worker. (b) One type of capital good.
(c) One standard product. (d) All of the Above.
140: Raising people out of poverty requires
A: economic growth. B: Economic development
C: both A and B D: None of the above
141: Increases in GDP per capita typically benefit those below the poverty line only False
As well as those who live near or considerably above it.
142: Inequality affects the amount of poverty generated by a given level of income. True
143: The most commonly used measure of economic inequality is the distribution of annual income
which is defined as
A: nominal income B: money income.
C: real income D: market income
144: equals market income plus cash payments to households by government.
A: nominal income B: money income.
C: real income D: market income
145: equals wages, interest, rent, and profit earned in factor markets, before paying income taxes.
A: nominal income B: money income.

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C: real income D: market income
146: Distribution of income the only dimension of inequality. False is not
147: Instead of income, development economists often look at the distribution of
A: household consumption B: household saving
C: both A and B D: none of the above
148: development economists often look at the distribution of household consumption, usually measured
by
A: household consumption B: household saving
C: both A and B D: household expenditures.
149: In poor countries income can be hard to measure, especially for
A: subsistence farm households B: normal farm households
C: emerging farm households D: none of them are correct
150: households who consume rather than market most of what they produce.
A: subsistence farm households B: normal farm households
C: emerging farm households D: none of them are correct
151: One might also be interested in the distribution of wealth, which always is more equal than the
distribution of either income or consumption. False unequal
152: The distribution of income depends on
A: ownership of factors of production
B: the role each factor plays in the production process.
C: both A and B
D: None of the above
153: Ownership of land and capital often is highly concentrated, so anything that increases the relative
returns to these factors makes the distribution of income more equal. False unequal.
154: The simplest way of depicting any distribution is to display its…………., which tells us how many
(or what percent of) families or individuals receive different amounts of income.
A: normal distribution B: frequency distribution
C: both A and B D: none of them are correct
155: Calculating the size distribution provides an easier way of identifying the degree of inequality
present in the underlying distribution. True
156: tell us the share of total consumption or income received by different groups of households, ranked
according to their consumption or income level.
A: size distribution B: frequency distribution
C: both A and B D: none of them are correct
157: Households or individuals are ranked quintiles, ranking households from the poorest 20 %, to the
next 20%, all the way to the richest 20% of households. True
158: provides a means for introducing some other techniques commonly used to measure inequality,
including some that reduce the entire distribution to a single number.
A: size distribution B: frequency distribution
C: both A and B D: none of them are correct
159:A clever graphical tool enables us to compare the distribution of income in different periods and
using different measures.

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A: Lorenz curve B: Elkomy curve
C: harrow curve D: none of the above
160: The income Lorenz curve graphs the cumulative percentage of income against the cumulative
percentage of households. True
161: The closer the Lorenz curve is to the line of equality, the more equal is the distribution of income.
True
171: •If everyone had the same income, the Lorenz curve would lie along the line of actuality (45-degree
line) this will be
A: perfect equality B: perfect inequality
C: somewhere in between D: none of this
172: If only one household received income and all other households had none, the curve would trace the
bottom and right-hand borders of the diagram
A: perfect equality B: perfect inequality
C: somewhere in between D: none of this
173: In all actual cases the Lorenz curve lies
A: perfect equality B: perfect inequality
C: somewhere in between D: none of this
174: The most frequently used statistic, the ………..can be derived from the Lorenz curve
A: Gini coefficient, B: correlation coefficient
C: variance coefficient D: all of the above
175: The larger the share of the area between line of equality (45-degree line) and the Lorenz curve, the
higher the value of the Gini coefficient. True
176: The theoretical range of the Gini coefficient is from
A: 0 (perfect equality) to 1 (perfect inequality
B: 1 (perfect equality) to 0 (perfect inequality
C: 1 (perfect equality) to 1 (perfect inequality
D: all of the above
178: In practice, values measured in national income distributions have a much narrower range, ordinarily
from about 0.25 to 0.65. True
Note
• Criticism of the Gini coefficient:
1. Collapsing all the information contained in the frequency distribution into a single number
inevitably results in some loss of information about the underlying distribution.
2. It is more sensitive to changes in some parts of the distribution than in others.
179: People sometimes refer to inequality and poverty as if they were the same thing but they are not.
True
180: Inequality is an important determinant of poverty. True
181: it describes the outcomes for one group relative to other groups but provides no information about
absolute standards of living.
A: Gini coefficient, B: correlation coefficient
C: variance coefficient D: all of the above
182: poverty is multidimensional true

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183: The availability of public services, including basic health and education, can also have an impact on
poverty status today and the spread of poverty across generations, independent of current consumption
levels. True
184: Another dimension of poverty is vulnerability to adverse shocks. True
185: expenditures in one period may raise a family above the poverty line, but in a subsequent period,
natural disasters, economy wide downturns, or even the ill health or death of a family's breadwinner
can push the family below the poverty line. True
186: by which a specific monetary value is defined as a dividing line between the poor and non-poor
A: equity line B: poverty line
C: A and B D: None of the above
187: the amount on the per capita cost of some minimal consumption basket of food and a few other
necessities.
A: equity line B: poverty line
C: A and B D: None of the above
188: Often governments specify only one poverty line. False more than one poverty line
189: Because of regional price differences, distinct poverty lines may be applied for urban versus rural
areas or, as is the case in Bangladesh, for different regions of the country. True
190: Once a poverty line (or lines) is established and expressed in a nation's own currency, that level of
consumption or income has to be adjusted on an annual basis to account for changes in the price of the
underlying bundle of goods. True
191: The goal is to maintain an……… poverty line over time.
A: constant B: changed C: declining D: all of the above
192: Most nations have their own poverty lines, and these could be used to make international
comparisons. True
193: An alternative and more widely adopted approach is to establish a single global poverty line. True
194: describes the severity of poverty.
A: The head-count index B: The poverty gap
C: Both A and B D: none of this
195: the ratio of the number below the poverty line to total population.
A: The head-count index B: The poverty gap
C: Both A and B D: none of this
Note
 The poverty gap (PG) can be calculated as:
PG = [(PL - MC)/PL] × H
 PL: stands for the poverty line.
 MC: is mean consumption per capita of all individuals below the poverty line.
 H: is the head-count index.
196: if poverty line =50 and mean consumption per capita of all individuals below the poverty line =40
And ratio of the number below the poverty line =20% poverty gap will be
A:3% B: 4% C: 5% D:8%
PG = [(PL - MC)/PL] × H = 50-40/50*20%=4%

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197: places greater weight on incomes that fall farther below the poverty line and thus more fully captures
the severity of poverty.
A: The head-count index B: The poverty gap
C: Both A and B poverty gap squared
198: The World Bank's 1990 World Development Report outlined a strategy for alleviating world poverty
which had two main elements:
(A) Promote market-oriented economic growth.
(B) Direct basic health and education services to the poor.
(C) To develop social safety nets (are similar to income transfers but, in their design, recognize that
household poverty often is temporary rather than continuing).
(D) all of the above
199: Most strategies for reducing poverty call for increasing the rate of overall economic growth, because
the poor are expected to benefit from economic growth along with the rest of the population. True
200: The basic mathematics of growth, distribution, and poverty suggests that, generally, growth should
be good for the poor. True
201: inequality does not systematically increase with economic growth. True
202: in most cases growth should benefit the poor just as it benefits others in a society. True

202: As long as GDP grows faster than the population, average incomes within each quintile usually also
decrease false increase

202: There is agreement among economists on the meaning of "Economic Planning". False no agreement
203: Any type of state intervention in economic affairs has been treated as planning, but the state can
intervene even without making any plan. True
204: is a realization of certain pre-determined and well-defined aims and objectives laid down by a central
planning authority to achieve economic, social, political or military objectives
A: Economic planning B: planning
C: Economic plan D: none of the above
205: is an attempt by the government to organize economic decision making and influence economic
outcomes.
A: Economic planning B: planning
C: Economic plan D: none of the above
206: is a written document containing government policy decisions on how resources shall be allocated
among various uses so as to attain a targeted rate of economic growth or other goals over a certain period
of time.
A: Economic planning B: planning
C: Economic plan D: none of the above
207: is a plan that sets targets to cover all the major sectors of the national economy.
A: Comprehensive Economic Plan B: A Partial Economic Plan
C: both A and B D: none of the above
208: is a plan that covers only a part of the national economy (e.g., agriculture, industry, tourism).
A: Comprehensive Economic Plan B: A Partial Economic Plan

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C: both A and B D: none of the above
209: is the procedure for drawing up and carrying a formal economic plan.
A: Economic planning B: planning
C: Economic plan D: Planning Process
Note
Steps of planning process
1: a government chooses social objectives,
2: sets various targets,
3: and finally organizes a framework for implementing, coordinating, and monitoring a development plan.
210: increasing the rate of capital formation by raising
A: the levels of income, B: saving
C: investment. D: all of the above
211: means that people's capacity to save is extremely low due to low levels of income and high
propensity to consume.
A: The head-count index B: The poverty gap
C: poverty line D: Poverty-Ridden
212: As a result, the rate of investment is low which leads to capital shortage and low productivity. True
213: Low productivity means low income and the vicious circle is incomplete False complete
214: This vicious economic circle can only be broken by
A: planned development B: economic development
C: economic growth D: all of the above
215: methods of planned development are open to developing countries:
a. Supported Industrialization by importing capital from abroad.
b. Self-sufficient Industrialization by forced saving
c. Both A and B
d. none of the above
216: The market mechanism works imperfectly in developing countries because of the ignorance and
unfamiliarity with it. True
217: To remove market imperfections, to mobilize and utilize efficiently the available resources, to
determine the amount and composition of investment, and to overcome structural rigidities, the market
mechanism is required to be achieved in developing countries through planning. True
218: the authority responsible for removing unemployment
A: a centralized planning authority
B: Egyptian tax authority
C: ministry of finance
D: all of them
219: the authority responsible for Balanced Development of the Economy.
A: a centralized planning authority
B: Egyptian tax authority
C: ministry of finance
D: all of them

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220: • The first condition for a plan is the setting up of a planning commission which should be divided
and sub-divided into a number of divisions and sub-divisions under such experts as economists,
statisticians, engineers dealing with the various aspects of the economy
A: Planning Commission. B: Statistical Data
C: Objectives. D: Fixation of Targets and Priorities
221: precondition for sound planning is a full survey of the existing and potential resources of a country
together with its lacks.
A: Planning Commission. B: Statistical Data
C: Objectives. D: Fixation of Targets and Priorities
222: The plan may lay down various goals and objectives which should be realistic, mutually compatible
and flexible enough in keeping with the requirements of the economy
A: Planning Commission. B: Statistical Data
C: Objectives. D: Fixation of Targets and Priorities
223: targets must be bold and cover every aspect of the economy
A: global targets B: Sectorial targets
C: both A and B D: none of the above
224: relating to individual industries and products in physical and value terms both for the private and
public sectors
A: global targets B: Sectorial targets
C: both A and B D: none of the above
225: Global and sectoral targets should be mutually consistent in order to attain the required growth rate
for the economy true
226: Priorities should be laid down on the basis of the short-term and long-term needs of the economy
keeping in view the available material, capital and human resources. True
227: The scheme of priorities should not be rigid but may be changed according to the requirements of the
country. True
228: savings, profits of public enterprises, net market borrowings, taxation and deficit financing are
A: Internal Sources of finance B: External Sources of finance
C: both A and B D: none of the above
229: net budgetary earnings corresponding to external assistance
. A: Internal Sources of finance B: External Sources of finance
C: both A and B D: none of the above
230: The plan should lay down such policies and instruments for mobilizing resources which fulfil the
financial expenditure of the plan without inflationary and balance of payments pressures. True
231: A plan should ensure proper balance in the economy, otherwise shortages or surpluses will arise as
the plan progresses. True
232: There should be balance between saving and investment, between the available supply of goods and
the demand for them, between manpower requirements and their availabilities, and between the demand
for imports and the available foreign exchange. True
233: consists of balancing the planned increase in output of various goods with the amounts and types of
investment
A: The Physical Balance B:The Monetary or Financial Balance

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C: both A and B D: none of the above
234: consists of balancing the incomes of the people with the amount of goods available to them for
consumption, the funds used for private investment and the amount of investment goods available to
private investors, the funds used for public investment and the amount of investment goods produced by
the public sector, and the balancing of foreign payments and receipt
A: The Physical Balance B:The Monetary or Financial Balance
C: both A and B D: none of the above
235: A strong, competent and incorrupt administration is the first condition for the success of a plan. But
this is what developing countries lacks the most. True

236: The Central Cabinet in a developing country should not take important economic decisions quickly
without getting them properly examined from technical advisers. True
237: Experienced administrative staff should be appointed in various ministries which should first prepare
good feasibility reports of proposed projects before starting them. True
238:It should gain experience in planning and starting a project, keeping it on schedule, modifying it in
case of some unexpected problems, and evaluating it from time to time. True
239: The state should lay down a proper development policy for the success of a development plan and to
avoid any drawbacks that may arise in the development process. True
240: • The success of a development plan can be tested mainly by
A: examining various proposals under each of the main elements of a development policy.
B: Good polices help, but they may not ensure success.
C: both A and B
D: none of the above
241: Every effort should be made to affect economies in administration, particularly in the expansion of
ministries and state departments. True

242: The people must feel confident that every pound that they pay to the government through taxation
and borrowings is properly spent for their welfare and development, and not dissolute away. True
243: Planning to be successful must take care of the
A: ethical standards
B:moral standards of the people.
C: both A and B
D: none of the above
244: • Developing countries should not follow the consumption patterns of the developed countries.
True

245: The theory of consumption should be democratic and prime attention must be given to goods that are
within the range of the model income that can be purchased by the typical family. True
246: Public cooperation is considered to be one of the important levers for the success of the plan in a
democratic country, as without public support no plan can success. True

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247: Economic planning should be above party politics, but at the same time, it should have the approval
of all the parties. True
248: In other words, a plan should be regarded as a National Plan when it is approved by the
representative of the people. True
249: From the problems of development planning
(a) uncertainties.
(b) Constant prices.
(c) Lack of coordination between plan policies and annual budgets.
(d) All of the Above.
250:one of the planning Type is centralized planning (T)
251: inadequate statistical data (error of estimation). Leads to problem of development planning (T)
252: one of the common problems in development planning that is based on assumption of constant prices
T
253: one of the main reason that cause problem. In planning that is no Control over private sector (T)
254: uncertainties that plan face which make it difficult to implement it) effect successful plan (T)
255. there are many restriction in developing Countries that lead to lack of coordination between plan
policies and annual budget. (T)

256. Capital - output ratio is an important element which the forecasts of plan are based but in developing
Countries Capital output ratio. is un predictable (T)

257.major problem in plan model is that. Assume affixed relation between input and output and constant
(capital to output ratio (T)
258.one of the macro, economic estimation problem that affect successful plan is to find optimum level
which is desirable T
259. The isoquant in solow model is ..... Rather than
A: curved. L Shaped
(B) L-shaped- curved
C: none of the above
D:both A and B
260.according to solow (Neoclassical production function) output can be expressed
A:Labour intensive method
(b) capital intensive method
(C) Constant return to scale
D all above
261. Solow model assume
(A) Decreasing return to scale
B. diminishing return to scale
C: Increasing return to scale
D: none of the above

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262: which of the following weakness of solow mode
A: taking technological change as a give
(b) substituting capital and labor
(c) diminishing return
(d) non of the above
263. unlike isoquant for fixed coefficient, the isoquant for neoclassical production function
(A) take labor as well as capital in to account
(b) are L shapped
(c) are capital intensive rather than tabor intensive
D: are smooth curve
264: according to harrod domar
A: production function is linear to Capital

B: the ratio of input to output is always constant

C: production function represented by isoquant

D:all of the above

265: production Function in which output assumed to linear to

A: Capital. (b) labor (c) both of them. (d) none of the above
266. which of the following reflect assumption of simple economy,
A:homogeneous worker B:one type of capital c:standered product D:all of the above

267. the Basic growth model consists of

A. four equations B:Five equation. C three equation. D:none of the above
(268) economic growth according to to basic growth model accrues by the increasing in
(A) capital stock through new investment (b) size of the labor force C) both (A), (B) D. none
269.saving ratio is constant between
(A) 10% to 20% B.10% to 40% (c) 20% to 40%. (D) none of the above
270.if the Capital stock decreases that mean

(A) new investment exceed depreciation ratio

(B) A depreciation ratio exceed depreciation investment
(C) Both
(D) Non
271: first step of economic planning

A: choose objective (b) set target (c ) organize frame work D. monitoring plan

272: the Component of development planning in mixed economy

(A) economic infrastructure b: economic policy C: A and b (d) none

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273: the circle that must be broken by economic develop planning

(A) poverty ridden (B) low productivity C:(a), (b) (D) none of the above.

274: the method of planned development that are open developing Countries
(a) supported industrialization (importing capital from abroad
(b) self-sufficient (by forced saving)
c: both a and b
D: non of the above

275: Balanced development in developing Countries require

A: development in agriculture sector (b) development in infrastructure (C) both (a), (b) D: none of them

(267) all of these Need for planning in developing Countries except

(a) to increase rate of economic development (b) to improve market mechanism.

(c) to remove unemployment D) to remove poverty and inequality

(E) to develop money and capital market ((F) to impose, and strengthen in Market mechanism

(note)
formulation of successful plan need

(A) planning Commission (b) statistical data (C), objective (d) target, (e) mobilization of Resources

(f) balanced plan (g) in corrupt and efficient administration

(H) Proper policy, (1) economic administration. And educational base

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