1) The Harrod-Domar model believes that an obstacle to development is the low level of _________________ in developing countries.

• A.labour
• B.human capital
• C.new capital formation
• D.land

2) Assume the capital-output ratio, k, is equal to 2.5 and the savings ratio is 10%. Using the Harrod-Domar model, GDP growth rate will be:

• A.0.25%
• B.25%
• C.7.5%
• D.4%

3) Kuznet's Inverted-U Hypothesis says that:

• A.Income inequality will worsen at the early stages of economic growth and will improve at later stages
• B.Income inequality will improve at the early stages of economic growth and then worsen over time
• C.Income inequality will remain constant over time
• D.Income inequality will worsen over time

4) A GINI coefficient of 0.2 for a country indicates:

• A.A high per capita income
• B.A highly equal income distribution
• C.A highly unequal income distribution
• D.A low per capita income

5) Sen's Capabilities approach is:

• A.A view of development that emphasizes a person's capability to keep a job
• B.A view of development the emphasizes the freedom a person has in terms of the functionings given his characteristics and his command over commodities
• C.A view of development that emphasizes increased globalization
• D.A view of development that emphasizes the economy's ability to sustain 2 to 5% annual GDP growth

6) A subsistence economy is characterized by:

• A.Zero exports
• B.Zero private savings
• C.Low agricultural productivity
• D.Zero private investment

7) If a country had an education index of 0.346, a health index of 0.425 and an income index of 0.396, the NHDI would be:

• A.none of the above
• B.0.386
• C.0.240
• D.0.058

8) The contemporary definition of development is:

• A.The process of improving the quality of all human lives and capabilities by raising people's levels of living, self-esteem and freedom
• B.The capacity of a national economy to generate and sustain an annual increase in its gross national income (GNI) at rates of 2% to 4%
• C.The capacity of a national economy to generate and sustain an annual increase in its gross national income (GNI) at rates of 5% to 7%
• D.The study of the efficient, least-cost allocation of scarce productive resources