MCQ Economic Development Quiz

Development Economics exam questions and answers:

Ques. The best indicator of economic development of any country is:

(a) Agriculture

(b) Transport

(c) Gross Production

(d) Per Capita Income

Ans. (d)

Ques. Under a floating exchange-rate system, if American exports increase and American imports fall, the value of the dollar will:

(a) Appreciate

(b) Depreciate

(c) Be officially revalued

(d) Be officially devalued

Ans. (a)

Ques. Inequality of Income is measured by:

(a) Human development index

(b) Gini Coefficient

(c) Per Capita Income

(d) Physical Quality of Life Index

Ans. (b)

Ques. GDP is the money value of final goods and services produced in the………….of a country during an accounting year

(a) Domestic territory

(b) Political territory

(c) Specific area

(d) FTZ area

Ans. (a)

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Ques. Full employment is the level at which there is

(a) Zero unemployment

(b) Normal rate of unemployment

(c) Less supply of labor

(d) Demand for goods is less than supply

Ans. (c)

Ques. Development means economic growth with:

(a) Price Stability

(b) Social Change

(c) Inflation

(d) Deflation

Ans. (b)

Ques. Devaluation of currency can correct a Balance of Payments deficit because___

(a) It lowers the price of exports in foreign currency and raises the price of imports in home currency

(b) It raises the price of exports in foreign currency and lowers the price of imports in home currency

(c) It raises the price of exports and imports in foreign currency

(d) It lowers the price of exports and imports in home currency

Ans. (a)

Ques. Which of the following explains economic growth:

(a) Increase in per capita production

(b) Increase in per capita real income

(c) structural change in the economy

(d) all the above are right

Ans. (d)

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Ques. Rather than constructing their own currency baskets, many nations peg the value of their currencies to a currency basket defined by the International Monetary Fund. Which of the following illustrates this basket?

(a) IMF tranche

(b) Special Drawing Rights

(c) Primary reserve asset

(d) Swap facility

Ans. (b)

Ques. The indicator of HDI is:

(a) Longevity

(b) Educational Attainment

(c) Standard of Living

(d) All of the above

Ans. (d)

Ques. Which of the following explains the term economic growth?

(a) Increase in per capita production

(b) Increase in per capita real income

(c) Structural change in the economy

(d) All the above are right

Ans. (d)

Ques. To get the Net National Product, we deduct from the Gross National Product:

(a) Direct Taxes

(b) Imports

(c) Interim payments

(d) Loss

Ans. (d)

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Ques. Economic development is characterized by

(a) Structural change in the economy

(b) Change in the occupational structure

(c) Both a and b

(d) None of the above

Ans. (c)

Ques. Economic development is characterized by

(a) Structural change in the economy

(b) Change in the occupational structure

(c) Both a and b

(d) None of the above

Ans. (c)

Ques. Which of the following explains the term economic development?

(a) Improvement in the technology involved

(b) Improvement in production

(c) Improvement in distribution system

(d) All the above

Ans. (d)

Ques. Under a floating exchange rate system, an increase in U.S. imports of Japanese goods will cause the demand schedule for Japanese yen to:

(a) Increase, inducing a depreciation in the yen

(b) Decrease, inducing a depreciation in the yen

(c) Increase, inducing an appreciation in the yen

(d) Decrease, inducing an appreciation in the yen

Ans. (c)

Ques. What is the Gross National Product:

(a) The total output of goods and services produced by the country’s economy

(b) The total domestic and foreign output claimed by residents of the country

(c) The sum of gross domestic product and investment

(d) National Income minus National Expenditure

Ans. (b)

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Ques. An underdeveloped economy is characterized by

(a) High per capita real income

(b) Large proportion of the labor force in the tertiary sector

(c) State of deprivation of a large proportion of the population

(d) All the above

Ans. (c)

Ques. The Bretton Woods Agreement of 1944 established a monetary system based on

(a) Gold and managed floating exchange rates

(b) Gold and adjustable pegged exchange rates

(c) Special Drawing Rights and managed floating exchange rates

(d) Special Drawing Rights and adjustable pegged exchange rates

Ans. (b)

Ques. An underdeveloped economy is characterized by

(a) High per capita real income

(b) Large proportion of the labor force in the tertiary sector

(c) State of deprivation of a large proportion of the population

(d) All the above

Ans. (c)

Ques. Who is known as the father of economics?

(a) Adam Smith

(b) Max Muller

(c) Johns Adams

(d) Karl Marx

Ans. (a)

Ques. Which among the following is a characteristic of underdevelopment?

(a) Vicious Circle of poverty

(b) Rising mass

(c) Growth of industries

(d) High rate of Urbanization

Ans. (a)

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Ques. Under a floating exchange-rate system, if the U.S. dollar depreciates against the Swiss franc:

(a) American exports to Switzerland will be cheaper in francs

(b) American exports to Switzerland will be more expensive in francs

(c) American imports from Switzerland will be cheaper in dollars

(d) None of the above

Ans. (a)

Ques. Scarcity of capital, technological backwardness and unemployment are generally found in:

(a) Developed countries

(b) None of the above

(c) Underdeveloped countries

(d) Both

Ans. (c)

Ques. Under managed floating exchange rates, if the rate of inflation in the United States is less than the rate of inflation pf its trading partners, the dollar will likely:

(a) Appreciate against foreign currencies

(b) Depreciate against foreign currencies

(c) Be officially revalued by the government

(d) Be officially devalued by the government

Ans. (a)

Ques. The rate of growth of an economy is measured in term of:

(a) National Income

(b) Per Capita Income

(c) Number of people who have been lifted above the poverty line

(d) Industrial Development

Ans. (a)

Ques. Which exchange-rate system does not require monetary reserves for official exchange rate intervention?

(a) Floating exchange rates

(b) Pegged exchange rates

(c) Managed floating exchange rates

(d) Dual exchange rates

Ans. (a)

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Ques. Which of the following denotes an underdeveloped economy?

(a) High level of inequalities

(b) Low level of capital productivity

(c) A relatively closed economy

(d) All the above

Ans. (d)

Ques. Which of the following denotes an underdeveloped economy?

(a) High level of inequality

(b) Low level of capital productivity

(c) A relatively closed economy

(d) All the above

Ans. (d)

Ques. A country’s Current Account:

(a) Balance equals the change in its net foreign wealth.

(b) Balance equals the change in its foreign wealth.

(c) Surplus equals the change in its foreign wealth.

(d) Deficit equals the change in its foreign wealth. E. None of the above.

Ans. (a)

Ques. Nominal GDP is

(a) The total value of goods and services net of exports

(b) The total value of goods and services produced during periods of low unemployment

(c) The total value of goods and services measured at current prices

(d) The total value of goods and services produced at full employment.

Ans. (c)

Ques. Economic growth is normally coupled with?

(a) Inflation

(b) Hyper Inflation

(c) Deflation

(d) Stagflation

Ans. (a)

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Ques. Capital formation in underdeveloped countries is a major bottleneck. The reason can be

(a) Small size of market with no incentive for investment

(b) Low level of income

(c) Demonstration effect

(d) All the above

Ans. (d)

Ques. Economic Planning is an essential feature of:

(a) Capitalist economy

(b) Socialist Economy

(c) Mixed Economy

(d) Dual Economy

Ans. (b)

Ques. Under adjustable pegged exchange rates, if the rate of inflation in the United States exceeds the rate of inflation of its trading partners:

(a) U.S. exports tend to rise and imports tend to fall.

(b) U.S. imports tend to rise and exports tend to fall.

(c) U.S. foreign exchange reserves tend to rise

(d) U.S. foreign exchange reserves remain constant

Ans. (b)

Ques. National income is

(a) NDP at market prices

(b) NDP at factor cost

(c) GNP at market prices.

Ans. (c)

Ques. Which of the following about the strategy of balanced growth is right?

(a) Simultaneous investment in all sectors

(b) All sectors are independent.

(c) Both

(d) None

Ans. (a)

Ques. The national Income is:

(a) Net National Product at market price

(b) Net National Product at factor cost

(c) Net Domestic Product at market price

(d) Net Domestic Product at factor cost

Ans. (c)

Ques. Which exchange-rate mechanism calls for frequent redefining of the par value by small amounts to remove a payments disequilibrium?

(a) Dual Exchange rates

(b) Adjustable Pegged Exchange Rates

(c) Managed Floating Exchange Rates

(d) Crawling Pegged Exchange Rates

Ans. (d)

Ques. National income is the __ Of all the goods and services produced by a country during a period of year

(a) Physical quantity

(b) Money value

(c) Value

(d) All the three

Ans. (b)

Ques. During the recessionary phase of a business cycle:

(a) The natural rate of unemployment will increase dramatically

(b) Potential national income will exceed actual national income

(c) Actual national income will exceed potential national income

(d) The real rate of interest will exceed the nominal rate of interest.

Ans. (b)