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survey of economics
Questions and Answers of
Survey Of Economics
1. What prevents LDC use of monetary, fiscal, and incomes policies from attaining goals of output and employment growth and price stability?
13. In what way might inflation avert civil war or political violence?
12. Why was inflation so rapid in Latin America in the 1960s, 1970s, and 1980s?
11. What causes LDC inflation? Which causes are most important? How might LDCs reduce inflation?
10. Why did the LDC inflation rate increase from the 1960s to the 1980s? Why did the LDC inflation rate fall from the 1980s to the 1990s?
9. Why are military expenditures as a percentage of GDP high in low-income countries?
8. Why is health, social security, and welfare spending as a percentage of GDP less in LDCs than DCs? Why is health, social security, and welfare spending as a percentage of total government spending
7. What, if any, is the tradeoff between tax policies that reduce income and wealth concentration and those that increase capital formation?
6. What tax measures can LDCs take to reduce income inequality? To increase capital and enterprise?
5. Indicate the benefits and difficulties associated with using value-added taxes in developing countries.
4. Why are direct taxes as a percentage of GDP generally lower, and indirect taxes as a percentage of GDP generally higher, for LDCs than DCs? Why is heavy reliance on indirect taxes as sources of
3. What are the goals of LDC tax policy? What obstacles do LDCs encounter in reaching their tax policy goals?
2. Why are taxes as a percentage of GNP generally lower for LDCs than for DCs?
1. What prevents LDC use of monetary, fiscal, and incomes policies from attaining goals of output and employment growth and price stability?
17. Indicate the adjustments made to compute the Genuine Price Indicator (GPI).How do these adjustments affect measures of net economic welfare? Evaluate GPI as a measure of economic welfare as an
16. Indicate the adjustments the World Bank makes to arrive at adjusted net savings.
15. How severely will a shortage of natural resources limit economic growth in the next half-century, especially in LDCs?
14. Discuss the role of green markets, green taxes, and green aid in reducing market imperfections concerning the environment and resource use. Discuss the possibility of using green markets, green
13. Assess the arguments for and against the use of international tradable emission permits in abating global greenhouse gases.
12. What program would you design for global optimal greenhouse-gas abatement?
11. Discuss the concept of global public goods, give examples of those that have environmental implications, and indicate the implications of global public goods for international funding programs.
10. How does geography affect economic development in the tropics? What measures are needed to overcome these adverse effects?
9. Discuss and assess the methods for estimating the monetary values of pollution discharge and ecological degradation.
8. What decision-making rule minimizes social cost when pollution is involved?Assess the position that optimal level of pollution emission is zero.
7. How do pollution levels vary with economic growth?
6. Theodore Panayotou contends that “Ultimately, excessive environmental damage can be traced to ‘bad’ economics stemming from misguided government policies and distorted markets.” Discuss
5. What is meant by Hardin’s “tragedy of the commons”? Identify environmental problems associated with this tragedy.
4. What are the market imperfections that contribute to environmental degradation?
3. What is meant by “sustainable development”? What implications should sustainable development have for investment criteria?
2. Assume you are asked as an economic practitioner to analyze a patient with Dutch disease. Analyze the causes of the disease, describe the patient’s symptoms, and prescribe an antidote to improve
1. Indicate in broad outline the movements of real world crude petroleum prices in the last quarter of a century. What impact have these prices had on oil-importing LDCs?
10. Is the concept of entrepreneurship applicable to socialist economies?
9. Are marginal individuals more innovative than nonmarginal individuals as entrepreneurs?
8. What are the socioeconomic factors that affect the supply of industrial entrepreneurs in mixed and capitalist LDCs?
7. What are some of the noneconomic factors affecting entrepreneurship in LDCs?
6. What are the advantages and disadvantages of family enterprises in LDCs?
5. What are the functions of the entrepreneur in LDCs? How might these functions differ from those of the entrepreneur in DCs?
4. What is meant by the entrepreneur as gap-filler? Why is this entrepreneurial concept more relevant to LDCs than DCs?
3. How valid is Baumol’s view that the oligopolistic competition to innovate can explain capitalism’s recent “growth miracle”?
2. Which steps in the process of developing technical advances are essential for LDCs? Which steps in the process can they skip in full or in part?
1. What is Schumpeter’s theory of economic development? What is the role of the entrepreneur in this theory? How applicable is Schumpeter’s concept of the entrepreneur to developing countries?
22. How much effect have computers, electronics, and information technology had in increasing productivity, especially in LDCs? Give examples. How great is the digital divide between DCs and LDCs?
21. What are shadow prices? Give some examples. What is a planning alternative to the use of shadow prices? Evaluate this alternative.
20. How do planners choose what discount rate to apply to investment projects?
19. How would Chongqing (China) municipal authorities decide whether to build a bridge across the Yangtze River?
18. What are the attractions of capital-intensive techniques in capital scarce LDCs?
17. What is the maximum labor absorption investment criterion? What are its flaws?
16. What are the differences between social and private benefit–cost calculations?
15. What is social benefit–cost analysis? Explain how it is used to rank alternative investment projects.
14. What criterion would you recommend that a planner use in allocating investible resources among different projects and sectors in a less developed economy?
13. What are some of the advantages and disadvantages of technology followership?
12. What implications does learning by doing have for LDC domestic and international technological policies?
11. How is the price of knowledge determined?
10. Can growth be conceptualized as a process of increase in inputs?
9. How do economists conceptualize technical knowledge? What effect does cost have in technology search?
8. What contributes to growth in output per worker-hour besides increases in capital per worker-hour?
7. Why is capital accumulation more important as a source of growth in LDCs than in DCs? Why is technical progress less important?
6. What is the relative importance of capital formation and technical progress as sources of economic growth? In the West? In LDCs?
5. How can LDCs improve the tax system to increase saving?
4. Is there much potential for using previously idle resources to increase LDC capital formation rates?
3. How adequate is the market for making saving decisions in LDCs?
2. How useful is the Lewis model in explaining early growth in capital formation in developing countries?
1. What measures can LDC governments take to increase net capital formation as a percentage of national income?
12. What investments can an LDC government make to increase the health and reduce the incidence of disease in the LDC? Examine these investments in the light of the opportunity cost for other
11. Why does Africa have such a high incidence of HIV/AIDS?
10. How do you explain cross-national differences in labor productivity?
9. How can LDCs reduce the brain drain?
8. How might government wage policies contribute to unemployment and underutilization of labor among the educated?
7. What advice would you give to the top official in the Department of Education in an LDC who is designing a long-run program of education, training, and extension in his country? (You may either
6. What are some of the ways that an LDC can increase its rate of returns to investment in secondary and higher education?
5. How does LDC government investment in educational expansion affect income distribution?
4. To what extent is education a screening device for jobs rather than a way of increasing productivity in LDCs? How might the importance of screening and enhancing productivity vary by educational
3. Does empirical evidence on the rates of return to education show that LDCs should put a priority on primary education relative to secondary and university education? Would you expect the relative
2. Would you expect the returns to a dollar of investment in education to vary from those in industrial plant, machinery, and equipment? Would noneconomic educational benefits affect the decision
1. What impact has the increased premium on skilled labor had on attitudes toward and the relative wage for physical work in DCs?
10. What is Lewis’s explanation for rural–urban migration? Why do critics think that the Lewis model overstates rural–urban migration?
9. What causes unemployment among the educated in LDCs? What educational policies will reduce this unemployment?
8. What is the urban informal sector? How does the informal sector labor market affect (or how is it affected by) labor markets in the urban formal and rural sectors?
7. Explain why rural–urban migration persists in the face of substantial urban unemployment (for example, 15 percent or more). How would the Harris–Todaro model explain this situation? Evaluate
6. What policies can LDC governments undertake to reduce the unemployment rate?
5. What factors contribute to high urban unemployment in LDCs? Why are macroeconomic theories based on Western experience inadequate in explaining this high unemployment?
4. Explain rural–urban migration in LDCs.
3. How widespread is disguised unemployment in LDCs?
2. What supply and demand factors for industrial labor explain rising LDC unemployment rates?
1. What inputs determine the level of national product in a given year? Are these inputs stocks or flows?
10. Which policies are more important for reducing fertility: family-planning programs or socioeconomic development?
9. Discuss and evaluate views of economic optimists such as Simon who argue that LDC governments do not need a policy to limit population growth.
8. What do you expect to happen to food production per capita (especially in LDCs)in the early decades of the 21st century?
7. How well does Malthusian population theory explain Western population growth? Contemporary LDC population growth?
6. What are some of the costs of a high fertility rate and rapid population growth?
5. Why would population continue to grow for several decades after it reaches a replacement-level fertility?
4. What, if any, is the statistical relationship between birth rate and GNP per capita?Between birth rate and income distribution? What are the reasons for these relationships?
3. Compare and contrast the historical population growth patterns of DCs and today’s LDCs. Why are the patterns different?
2. Explain the demographic transition theory. At what stages in the theory are LDCs? Why are they in different stages?
1. What factors have contributed to a rising LDC population growth rate since 1950 compared to previous periods of the same length? Why has the LDC population growth rate decelerated in recent
3. Contemporary LDC population growth has been faster than that of the DCs during their early transitional period because of a sharper drop in mortality rates in LDCs. Today’s developing countries
2. The demographic transition is a period of rapid population growth occurring between a preindustrial, stable population characterized by high fertility and mortality rates and nearly equal birth
1. Population growth in the second half of the 20th century, especially among LDCs, is unprecedented in human experience. Yet, since 1960, population growth has decelerated. The developing world has
12. Is Soviet and Chinese collectivism (similar to that before 1975) practicable in LDCs? Compare and explain China’s agricultural progress in the Maoist period(1949–76) to that of the period
11. What policies are most effective in increasing rural income and reducing rural poverty? What strategies are needed to prevent rural development policies from increasing rural poverty through
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