Underline the term or phrase that best explains the following statements:

1. [Social, economic] indicators give a better picture of the standards of living.

2. A high GNP [necessarily, not necessarily] implies a better life.

3. Adam Smith favors a [limited, extensive] role of government in development.

4. Development comes [before, after] economic growth.

5. The unemployment rate is determined by dividing the number of unemployed workers by [population, labor force, number of students].

6. The income of this country is used to classify countries [United States, Japan, Saudi Arabia].

7. Growth is the [result, process] of development.

8. Production performance of a country is indicated by [GNP, output levels, exports]. 39

9. Economic development is a [temporary, permanent, continuous] process of changes.

10. These are moneylenders in the rural areas which charge very high interest rates [rural banks, commercial banks, usurers].

Essay

1. What is the best theory of economic development? Explain your answers.

2. Why is income per capita and GNP measures alone not enough to make a conclusion whether a country has developed or not?