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Growth and Development Economics Questions and Answers

131.

In the context of the theory of economic growth, match the theory/facts given in List I with their propounders given in List II :

List - IList - II
(a) Stylised facts of economic growth(1) R.M. Solow
(b) Exogenous growth theory(2) N. Kaldor
(c) Golden rule of accumulation(3) Radner & Samuelson
(d) Optimal growth turnpikes(4) E.S. Phelps

Codes :
(a) (b) (c) (d)

Exam Year(s)

UGC NET - 2013,

Answer: C

The pairs are the stylised facts of growth with N. Kaldor, exogenous growth theory with R.M. Solow, the golden rule of accumulation with E.S. Phelps, and optimal growth turnpikes with Radner and Samuelson. This is a-2, b-1, c-4 and d-3.

Kaldor listed the stylised facts, Solow built the exogenous (neoclassical) growth model, and Phelps stated the golden rule. The turnpike theorems came from Radner and from Samuelson with Dorfman and Solow. The codes that give the golden rule to Radner and Samuelson fail on this point.

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132.

The endogeneous growth theory seeks to provide explanation for which of the following determinants of growth that the Solow's model did not explain ?

Exam Year(s)

UGC NET - 2013,

Answer: C

The official key gives 'Role of the government in promoting growth'. Endogenous growth theory brings in policy as a determinant of the growth rate, for example through public support for human capital, research and infrastructure, which the Solow model took as given outside the model.

Technical progress and labour growth were treated as exogenous in Solow's model, and endogenous theory tries to explain at least the first, so the wording of the options is loose. The key is kept as printed.

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133.

'Multi-dimensional Poverty Index' (MPI) is a new index to be included in

Exam Year(s)

UGC NET - 2013,

Answer: B

The Multi-dimensional Poverty Index was introduced in the Human Development Report (the 2010 edition, produced by UNDP) and replaced the earlier Human Poverty Index.

The World Development Report belongs to the World Bank and deals with a yearly theme, and the other two titles are not the report in which the MPI appeared. The index measures deprivations in health, education and living standards together.

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134.

Which is the better measure of welfare ?

Exam Year(s)

UGC NET - 2013,

Answer: C

Per capita disposable income is the better measure of welfare among the options. It is the income actually available to people for consumption and saving after direct taxes, and it is divided by population, so it comes closest to what households can enjoy.

National income and gross national product are totals that say nothing about distribution across people, and per capita income ignores taxes. So disposable income per head is the closest to economic welfare.

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135.

In whose economic theories, Malthus' theories are in the base ?

Exam Year(s)

UGC NET - 2013,

Answer: C

Malthus' theories lie at the base of the economic theories of Keynes. Malthus argued that general gluts could occur because of a lack of effective demand, and Keynes took this up and developed it in the theory of effective demand.

Adam Smith and Ricardo held that supply creates its own demand, so they rejected the glut argument. Robbins is known for his definition of economics, not for building on Malthus.

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136.

Verdoon's law is about the

Exam Year(s)

UGC NET - 2013,

Answer: A

Verdoorn's law states a positive relation between the growth of output (and with it employment and population) and the growth of production per head. Faster growth of output raises productivity through economies of scale and learning by doing.

The options that speak of a negative relation reverse the law, and the one on population growth and employment does not mention productivity at all, which is the point of the law.

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137.

The concept of vicious circle of poverty is associated with

Exam Year(s)

UGC NET - 2013,

Answer: B

The vicious circle of poverty is associated with Ragnar Nurkse: a country is poor because it is poor, since low income means low saving and investment and so low productivity and low income again. Keynes, Marx and Mill are not known for this idea. The keyed answer is (B). Nurkse developed it in his book on capital formation in underdeveloped countries, in which a low level of income on both the supply and the demand side of capital keeps the economy where it is.

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138.

Inverted 'U' shaped income distribution hypothesis is associated with

Exam Year(s)

UGC NET - 2013,

Answer: C

The inverted U-shaped hypothesis of income distribution, in which inequality first rises and then falls as an economy develops, is associated with Simon Kuznets. J.B. Clark is known for marginal productivity theory, Ricardo for the theory of rent and distribution among classes, and Adam Smith for the division of labour. So (C) is correct. Kuznets drew the curve from data on the relation between inequality and per capita income, and the curve rises in the early stages of growth and falls later.

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139.

Components of HDI are

I. Longevity
II. Infant mortality
III. Educational attainment
IV. Decent standard of living
Codes :

Exam Year(s)

UGC NET - 2013,

Answer: D

The components of the Human Development Index in the form used for these years are longevity (life expectancy), educational attainment and a decent standard of living (income). Infant mortality is not a component, although it is an indicator of health used in other measures. So I, III and IV are correct, option (D). The other options include infant mortality or leave out a component. Longevity is measured by life expectancy at birth and educational attainment by literacy and enrolment.

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140.

Assertion (A) : In Marxian scheme of things, M → C → M', where M' \(\gt\) M and M' - M is surplus value.

Reason (R) : The main cause of this surplus value is raw materials, machines, etc.
Codes :

Exam Year(s)

UGC NET - 2013,

Answer: B

In the Marxian scheme the circuit is M-C-M', where money buys commodities and is turned back into more money, M' being greater than M, and M' - M is surplus value, so the assertion is correct. The reason is wrong: surplus value arises from labour power, which creates more value than its own wage, and not from raw materials and machines, which only pass on their own value to the product. With a correct assertion and a wrong reason the answer is (B).

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