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economics mcq with answers

Economic Growth and Development
1.  Which of the following is generally regarded as the true index of economic growth?
A. An increase in national income at constant prices during a year B. A sustained increase in real per capita income
C. An increase in national income at current prices over time D. An increase in national income along with a corresponding incease in population

2.  The concept of economic growth is:
A. Identical with the concept of economic development B. Narrower than the concept of economic development
C. Wider as compared to that of economic development D. Unrelated to the concept of economic development

3.  Which of the following is not an indicator of economically underdeveloped countries?
A. Low per capita income B. High death-rate
C. Low proportion of labour force in the primary sector D. High level of illiteracy

4.  The rate of growth of an economy mainly depends upon:
A. The rate of growth of the labour force B. The proportion of national income saved and invested
C. The rate of technological improvements D. All of the above

5.  Among the following determinants of growth, which is a non-economic factor?
A. Natural resources B. Population growth
C. Favourable legislation D. Capital accumulation

6.  Besides increase in output, economic development is concerned with:
A. Inputs and their efficiency B. Equitable distribution of income
C. Life sustenance, self-esteem and freedom from want, ignorance and squalor D. All of the above

7.  The stationary state as envisaged by Adam Smith, is marked by:
A. Low rate of profit B. Subsistence level wages
C. High rents D. All of the above

8.  Which of the following is inconsistent with Adam Smith's theory of development?
A. Development process is cumulative in nature B. There is no limit to the growth process
C. Capital accumulation and market extension are two prerequisites for output expansion D. There should be no government interference in the working of the economy

9.  The division of labour, according to Adam Smith, is limited by:
A. The extent of the market B. The quantity of capital available
C. Both (a) and (b) D. The size of labour force

10.  Among the various determinants of the growth of national wealth Adam Smith accorded central place to:
A. Division of labour B. Capital
C. Natural resources D. Technology

11.  Who put forward the theory of social dualism?
A. A.Lewis B. G.Myrdal
C. J.H.Boeke D. A.O.Hirshman

12.  Who coined the phrase 'demonstration effect'?
A. W.W.Rostow B. James Duessenberry
C. R.Nurkse D. J.K.Galbraith

13.  To achieve full economic growth, Malthus laid special emphasis on the proper combination of:
A. Production and distribution B. Natural resources and capital
C. Labour and technology D. Production and trade

14.  What according to Malthus puts a stop to the growth process?
A. Inadequacy of capital accumulation B. Deficiency in effective demand
C. Rapid population growth D. Operation of diminishing returns in agriculture

15.  Identify the main factor which according to Malthus makes an economy move downwards in the long run to the subsistence level:
A. Population pressure B. Overproduction
C. Excess savings D. Exploitation of workers

16.  Which of the following measures, according to Malthus, would be helpful in raising and maintaining demand at a higher level?
A. Maintaining unproductive consumption of luxury goods B. Expansion of internal and external trade
C. Ensuring employment to the poor in public works D. All of the above

17.  Which of the following statements is not correct in the light of the Malthusian theory of growth?
A. Growth of income cannot take place on its own B. Population tends to increase in response to rise in income
C. There can be no general glut or overproduction in the market D. Excess savings on the part of capitalists is the cause of overproduction

18.  Which of the following statements is not in agreement with the Malthusian view on economic growth?
A. The process of economic growth is automatic B. Deficiency in effective demand halts the growth process
C. Lasting equilibrium can only be at the subsistence level D. Savings are desirable only upto the limit set by the existence of profitable opportunities for investment

19.  Which sector was emphasised most by Ricardo in the context of economic growth?
A. Trade B. Industry
C. Agriculture D. Services

20.  In the Ricardian scheme of things, savings are provided by:
A. Labourers B. Capitalists
C. Landlords D. Both (b) and (c)

21.  Whichone of the following, according to Ricardo, would form a bottleneck to economic growth?
A. Shortage of land B. Rising rent
C. Shortage of gold and silver D. Rising wage bills

22.  Which one of the following statements is not in tune with the Ricardian theory of growth?
A. Rent tends to rise B. Money wages tend to rise
C. Profits tend to fall D. Profits tend to rise

23.  Which one of the following is not an assumption of the Ricardian theory?
A. Rising real wages B. Fixity of land
C. Operation of the law of diminishing returns D. Perfect competition

24.  Which of the following policy-prescriptions for economic growth was suggested by Ricardo?
A. Government's active participation in the economic field B. Free trade in commodities
C. Control over population growth D. Regulation of competition

25.  In the Ricardian system, a crucial role in development was assigned to:
A. Specialisation B. Technological changes
C. Profits D. Government

26.  The stationary state according to Malthus and Ricardo, is characterised by:
A. The disappearance of profits B. Net investment falling to zero
C. Wages coinciding with the subsistence level D. All of the above

27.  Which of the following is not a part of the classical theory of economic development?
A. Labour supply would increase with rise in wages B. Stationary state
C. Government interference D. Capital accumulation is the basic cause of growth

28.  Which of the following had the approval of the classical economists (particularly J.S. Mill) as an aid to development?
A. Subsidizing the poor B. Imposition of temporary duties on imports to develop particular industries
C. Regulation of activities of the rising business class D. Appropriating a part of the national product by the government for unproductive uses

29.  The classical theory of economic development is of relevance for the less developed countries today because it lays emphasis on:
A. Need for favourable institutional and social initiatives B. Extension of markets
C. Capital accumulation D. All of the above

30.  According to the neo-classical theory, economic development is:
A. Gradual B. Harmonious
C. Cumulative D. All of the above

31.  Unemployment created by some long-term change in demand or technological conditions in an economy is known as:
A. Frictional unemployment B. Cyclical un-employment
C. Structural unemployment D. Disguised unemployment

32.  Arrange the following Rostow's stages of economic growth in their proper sequence: I, Traditional society; II. Take-off stage; III. Age of mass consumption; IV. Drive to maturity
A. I, II, IV, III B. I, II, III, IV
C. II, I, IV, III D. II, I, III, IV

33.  How many stages of economic growth were defined and analysed by Rostow which all economies are supposed to pass through in the course of their development?
A. Seven B. Five
C. Four D. Three

34.  What causes development in terms of Rostow's theory?
A. Favourable propensities of people B. Changing profile of leading sectors of the economy
C. A sharp rise in investment D. All of the above

35.  Identify the country which was the first to move to the stage of high mass consumption:
A. UK B. USA
C. Germany D. France

36.  The take-off stage is characterised by:
A. Rise in the rate of productive investment from 5% to over 10% of national income B. Development of one or more substantial manufacturing sectors with a high growth rate
C. Quick emergence of a political, social and institutional framework to enable expansion in various fields D. All of the above

37.  Under the 'big-push' strategy of development, large investments are to be directed towards:
A. Agriculture B. Industry
C. Power D. Transport

38.  The basic logic behind the 'big-push' strategy of development is related to:
A. Internal economies B. External economies
C. An optimum combination D. Both (a) and (b)

39.  In the context of which region was the 'big push' strategy of development formulated?
A. South Asia B. South East Asia
C. Eastern Europe D. East Africa

40.  The 'big-push' strategy of development was first advocated by:
A. Paul N-Rosenstein-Rodan B. Simon Kuznets
C. W.A, Lewis D. A.O.Hirshman

41.  The justification of the 'big-push' strategy, which involves concentrated efforts in the form of investments on a large scale, is based on:
A. Indivisibilities of demand B. Complimentarily of demand
C. Skill formulation D. All of the above

42.  The capital-output ratio in developed countries is:
A. Generally fluctuating B. Fairly stable
C. Rigidly stationary D. Gradually increasing

43.  The incremental capital-output ratio (ICOR) refers to the:
A. Ratio of investment to change in output B. Ratio of capital stock to the total output
C. Marginal productivity of capital D. Relationship between investment that is financed by the citizens of a country and the income enjoyed by them

44.  The capital-output ratio is determined by:
A. Sectoral allocation of capital B. Level of economic activity
C. Human and natural resources D. All of the above

45.  Which growth model inspired the use of capital-output ratio for development planning?
A. The Harrod-Domar model B. Solow's mode
C. Kaldor's model D. Feldman's model

46.  The capital-output ratio in a country during the different phases of growth:
A. Remains unchanged B. Fluctuates widely
C. Changes within narrow limits D. Shows a secular declining trend

47.  As an aid to development planning, much use is being made today of the input-output analysis. Who first used it?
A. H. Liebenstein B. W.W.Leontief
C. W.A.Lewis D. A.O.Hirshman

48.  Which of the following statements is incorrect?
A. The essence of balanced growth is that the economy should advance at a steady rate with savings equal to investment B. The thesis of development with unlimited supplies of labour was originally formulated by R. Nurkse
C. The capital-output ratio is the inverse of the annual rate of return on productivity of capital D. E.D. Domar assumed that full employment of labour and capital occurred simulataneously

49.  Balanced growth implies:
A. Simultaneous development of a variety of activities, which support one another B. Equal allocation of resources to different sectors
C. Different sectors growing at their natural rates of growth D. Uniform rate of growth of output over time

50.  Development with unlimited supplies of labour hypothesis was originally formulated by:
A. Gustav Ranis B. W.A.Lewis
C. R. Nurkse D. J.Schumpeter

51.  Which of the following is not correctly matched?
A. Big-push strategy: Paul N. Rosenstein- Rodan B. Balanced growth theory: R. Nurkse
C. Development with unlimited supplies of labour: A-0. Hirschman D. Critical minimum strategy: H. Uebenstein

52.  If the capital-output ratio is 4:1 and the annual growth rate of population is 2.5%, what will be required rate of investment in the economy in order to achieve 3% growth per annum in per capita income?
A. 30% B. 20%
C. 15% D. 12%

53.  With economic growth, the proportion of labour-force engaged in agriculture:
A. Increases B. Decreases
C. Remains unaffected D. Changes in an uncertain manner

54.  A strategy of heavy industry is sometimes preferred for a developing economy because it can:
A. Generate employment opportunities on a large scale B. Provide a strong base for rapid industrialisation
C. Contain inflationary pressures D. Meet deficits in balance of payments in the short-run

55.  In which sphere are shadow prices particularly useful?
A. Project evaluation and cost-benefit analyses B. Calculation of surplus value
C. Sales policy of firms D. Consumers equilibrium

56.  Identify the economist who first advocated a rolling plan for developing countries?
A. J. Robinson B. N.Kaldor
C. G.Myrdal D. Paul A.Samuelson

57.  Which of the following is inconsistent with the Schumpeter's theory of development?
A. The course of growth is continuous B. The output expansion, initiated by the entrepreneue, increases in size with time, making it cumulative
C. Growth takes place on account of entrepreneurs who, with the help of bank credit, invest in innovative activity D. Capitalism destroys itself by being successful through the erosion of its institutions, by the hostility of its intellectuals and other elite classes, and also by the weakening of entrepreneurial innovation

58.  According to the Schumpeter's model, the innovating entrepreneurs get the necessary finance from:
A. Voluntary savings B. Own resources
C. Bank credit D. Government

59.  Which one of the following was given a central place by Schumpeter in his theory of development?
A. Capital accumulation B. Role of the Government
C. Need for balanced growth D. Role of innovations

60.  With which of the following kinds of dualism is H. Myint particularly associated with?
A. Technological dualism B. Geographical dualism
C. Financial dualism D. Social dualism

61.  Who formulated the theory of circular and cumulative causation which explains the perpetuation of underdevelopment through growing inequalities between developed and the underdeveloped countries?
A. A. Lewis B. Gunnar Myrdal
C. B. Higgins D. J.H.Boeke

62.  The second stage of the theory of demographic transition is characterised by:
A. High birth-rate and high death rate B. High birth-rate and falling death-rate
C. Low birth-rate and low death-rate D. Falling birth-rate and falling death-rate

63.  Which of the following concepts, which are now extensively used in growth economics, was first formulated by Keynes?
A. Marginal propensity to consume B. Marginal propensity to save
C. Marginal efficiency of capital D. All of the above

64.  According to Keynesian economics, saving and investment are brought into equilibrium by variations in:
A. Income B. Price
C. Consumption D. Output

65.  Two economists have been particularly associated with the formulation of development with surplus labour hypothesis. One is R. Nurkse. Who is the other?
A. W.A. Lewis B. James S. Duessenberry
C. W.W. Rostow D. Simon Kuznets

66.  Perspective planning refers to:
A. Indicative planning B. Annual planning
C. Structural planning D. Long-term planning

67.  J.F. Meade pointed out three principles means of growth. Which of the following is not on the list?
A. Growth of working population B. Capital accumulation
C. Devaluation D. Technical progress

68.  The Harrod-Domar model is one of the well known models of growth. Which of the two authors of this model wrote earlier and in which year?
A. Domar in 1940 B. Harrood in 1939
C. Domar in 1946 D. Domar in 1948

69.  Which of the following models formed the basis of India's Second Five Year Plan?
A. Harrod-Domar model B. Raj-Sen model
C. Cambridge model D. Mahalanobis model

70.  Which of the following models makes the assumption of constant saving-income ratio?
A. Kaldor model B. Leontief model
C. Harrod-Domar model D. Joan Robinson model

71.  Identify the model which is concerned with the 'golden age' equilibrium:
A. Kaldor model B. Joan Robinson model
C. Keynesian model D. Domar model

72.  Some models focus their attention on the maximum rate of growth at which the economy can grow. Which of the following models is of this type?
A. Keynesian model B. Hicks model
C. Von-Neumann model D. Solow model

73.  Identify the model, which analyses the contribution of technological progress to the overall growth rate:
A. Solow model B. Kaldor model
C. Harrod model D. Tobin model

74.  Which of the following; is a two-sector model?
A. Solow model B. Harrod-Domar model
C. Joan Robinson mode D. Keynesian model

75.  There is a model of inter-industrial relations where technological relations between industries are assumed to remain constant. Which one is it?
A. Mahalanobis model B. Feldman model
C. Leontief model D. Lewis model

76.  India's First Five Year Plan was based on:
A. Mahalanobis model B. Feldman model
C. Harrod-Domar model D. Leontief model

77.  Which of the following models uses three distinct concepts of stages of growth?
A. Ramsey model B. Harrod model
C. Domar model D. Lewis model

78.  Marx refers to the concept of organic composition of capital. Which of the following ratios stands for this capital? Constant capital = C; Variable capital = V; Surplus value = S
A. C/(V+S) B. C/V
C. C/(C+V) D. (C+V)/V

79.  Marx had given a concept of unemployment in the context of the capitalist system which keeps wages down or prevents wages from rising even as demand for labour increases. What is that concept called?
A. Surplus labour B. Reserve army of labour
C. Under employment D. Disguised unemployment

80.  Marx attributed the capitalist crisis to:
A. High rate of wages B. Falling rate of profit
C. Inflationary pressures D. Exploitation of labour

81.  According to R. Nurkse, the inducement to invest in the context of an underdeveloped economy is limited mainly by the:
A. Lack of savings B. Size of the market
C. Lack of investment opportunities D. Low productivity of labour