Growth and Development Economics Questions and Answers

Q: Theory of Big Push describes different kinds of .............

The Big Push theory describes different kinds of external economies and indivisibilities.Rosenstein-Rodan argued that development needs a large, simultaneous investment programme because of indivisibilities: in the production function (lumpy infrastructure and social overhead capital), in demand (industries create markets for one another, so they must start together), and in the supply of savings. Investments that are unprofitable one at a time become profitable together, thanks to the external economies they create for each other.Stimulants and shocks, equilibrium traps and growth agents are terms from other theories (Leibenstein's, for instance).

Q: The way income is distributed across individuals and households is referred to as :

It is referred to as vertical inequality.Vertical inequality is inequality among individuals or households ranked from poorest to richest, the usual income distribution measured by the Gini coefficient or quintile shares. Horizontal inequality, a term associated with Frances Stewart, is inequality between culturally defined groups, such as ethnic, religious or regional groups.Absolute and relative inequality refer to whether gaps are measured in absolute amounts or proportions, not to whose incomes are compared.

Q: According to Hirschman ............. industry is having highest combined linkage score ?

The highest combined linkage score belongs to iron and steel.Hirschman's unbalanced growth strategy recommends investing first in industries with strong backward linkages (demand for inputs from other industries) and forward linkages (supply of inputs to other industries). Using the input-output estimates of Chenery and Watanabe, Hirschman pointed to iron and steel as having the highest combined backward and forward linkages, since it both buys from mining and energy and supplies a wide range of manufacturing.Textiles, energy and agro-based industries have weaker combined linkages in that ranking.

Q: Who has developed the theory of technological dualism ?

The theory of technological dualism was developed by Benjamin Higgins.Higgins explained dualism in underdeveloped economies by the different technologies of two sectors: a modern sector using capital-intensive methods with fixed factor proportions, and a traditional sector with variable proportions and labour-intensive methods. Because the modern sector absorbs little labour, population growth swells the traditional sector, causing disguised unemployment.J.H. Boeke developed the theory of social dualism, based on the clash of Western and Eastern social systems. Nelson and Kindleberger are not associated with technological dualism.

Q: According to Rostow's growth model ............... stage is a watershed in the life of a society ?

The watershed is the take-off stage.In Rostow's Stages of Economic Growth (1960), the take-off is the decisive interval, of roughly two decades, in which the old obstacles to steady growth are overcome and growth becomes the normal condition. Rostow called it the great watershed in the life of modern societies, marked by a rise in the rate of productive investment to over 10 per cent of national income and the rapid growth of leading sectors.The traditional society comes before it, and the drive to maturity and the age of high mass consumption follow once growth is already self-sustaining.

Q: Which of the following economists have developed New Growth Theory ?

New Growth Theory was developed by Romer, Lucas and Arrow.Endogenous (new) growth theory explains long-run growth from within the model rather than by exogenous technical progress. Paul Romer (1986, 1990) modelled growth through knowledge spillovers and research, Robert Lucas (1988) through human capital accumulation, and Kenneth Arrow's earlier 'learning by doing' (1962) is recognised as a forerunner of these models.Robinson and Kaldor belong to the Cambridge growth tradition, Marx, Schumpeter and Keynes to earlier schools, and Meade to neoclassical growth, so the other groupings are wrong.

Q: The basic needs approach to economic development consists of ..........

The basic needs approach consists of provision of health services, education, housing, sanitation, water supply and adequate nutrition.Promoted by the ILO in 1976 and by economists such as Paul Streeten, the approach says development should first ensure that everyone has the minimum requirements of a decent life: food, clothing and shelter, along with essential services such as health care, education, safe water and sanitation.Basic income, a minimum wage and a public distribution scheme are possible policy tools, but each covers only part of the list; the approach is defined by the full set of basic needs.

Q: In which year the World Development Report had the theme of 'Challenge of Development' ?

The theme 'The Challenge of Development' was in 1991.The World Bank's World Development Report 1991 was titled 'The Challenge of Development'. It argued for a market-friendly approach in which governments invest in people and infrastructure and provide a stable macroeconomic framework while letting markets work.The 1990 report was on poverty, and the 1999/2000 and 2000/2001 reports were on entering the 21st century and attacking poverty, so the other years carry different themes.

Q: Which one of the following is not an indicator of the multidimensional Poverty Index ?

The one that is not an indicator of the MPI is maternal mortality.The global Multidimensional Poverty Index, developed by the Oxford Poverty and Human Development Initiative with UNDP, has three dimensions: health (nutrition, child mortality), education (years of schooling, school attendance) and living standards (cooking fuel, sanitation, drinking water, electricity, housing, assets).Health, education and living standard are its dimensions, so they are part of the index. Maternal mortality is not among the global MPI's indicators.

Q: The ratio of female to male HDI is known as ..............

It is the Gender Development Index.Since 2014 the UNDP's Gender Development Index has been calculated as the ratio of the female Human Development Index to the male HDI. A value of 1 means parity; values below 1 show that women lag behind men in health, education and income.The Gender Inequality Index measures loss of achievement from inequality in reproductive health, empowerment and the labour market, not a ratio of HDIs. The older Gender-related Development Index (1995-2009) adjusted the HDI for gender gaps rather than taking a ratio, and the sex ratio counts females per 1,000 males.

21.

Theory of Big Push describes different kinds of .............

A.Stimulants and shocks
B.External economies and indivisibilities
C.Equilibrium traps
D.Growth agents

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: B

The Big Push theory describes different kinds of external economies and indivisibilities.

Rosenstein-Rodan argued that development needs a large, simultaneous investment programme because of indivisibilities: in the production function (lumpy infrastructure and social overhead capital), in demand (industries create markets for one another, so they must start together), and in the supply of savings. Investments that are unprofitable one at a time become profitable together, thanks to the external economies they create for each other.

Stimulants and shocks, equilibrium traps and growth agents are terms from other theories (Leibenstein's, for instance).

Discuss in Forum

22.

The way income is distributed across individuals and households is referred to as :

A.Absolute inequality
B.Relative inequality
C.Vertical inequality
D.Horizontal inequality

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: C

It is referred to as vertical inequality.

Vertical inequality is inequality among individuals or households ranked from poorest to richest, the usual income distribution measured by the Gini coefficient or quintile shares. Horizontal inequality, a term associated with Frances Stewart, is inequality between culturally defined groups, such as ethnic, religious or regional groups.

Absolute and relative inequality refer to whether gaps are measured in absolute amounts or proportions, not to whose incomes are compared.

Discuss in Forum

23.

According to Hirschman ............. industry is having highest combined linkage score ?

A.Textiles
B.Iron and Steel
C.Energy
D.Agro-based industries

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: B

The highest combined linkage score belongs to iron and steel.

Hirschman's unbalanced growth strategy recommends investing first in industries with strong backward linkages (demand for inputs from other industries) and forward linkages (supply of inputs to other industries). Using the input-output estimates of Chenery and Watanabe, Hirschman pointed to iron and steel as having the highest combined backward and forward linkages, since it both buys from mining and energy and supplies a wide range of manufacturing.

Textiles, energy and agro-based industries have weaker combined linkages in that ranking.

Discuss in Forum

24.

Who has developed the theory of technological dualism ?

A.J.H. Boeke
B.Benjamin Higgins
C.R.P. Nelson
D.Charles Kindleberger

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: B

The theory of technological dualism was developed by Benjamin Higgins.

Higgins explained dualism in underdeveloped economies by the different technologies of two sectors: a modern sector using capital-intensive methods with fixed factor proportions, and a traditional sector with variable proportions and labour-intensive methods. Because the modern sector absorbs little labour, population growth swells the traditional sector, causing disguised unemployment.

J.H. Boeke developed the theory of social dualism, based on the clash of Western and Eastern social systems. Nelson and Kindleberger are not associated with technological dualism.

Discuss in Forum

25.

According to Rostow's growth model ............... stage is a watershed in the life of a society ?

A.Traditional society
B.Drive to maturity
C.Take-off
D.Age of high mass consumption

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: C

The watershed is the take-off stage.

In Rostow's Stages of Economic Growth (1960), the take-off is the decisive interval, of roughly two decades, in which the old obstacles to steady growth are overcome and growth becomes the normal condition. Rostow called it the great watershed in the life of modern societies, marked by a rise in the rate of productive investment to over 10 per cent of national income and the rapid growth of leading sectors.

The traditional society comes before it, and the drive to maturity and the age of high mass consumption follow once growth is already self-sustaining.

Discuss in Forum

26.

Which of the following economists have developed New Growth Theory ?

A.Romer, Lucas and Arrow
B.Romer, Robinson and Kaldor
C.Marx, Schumpeter and Keynes
D.Romer, Schumpeter and Meade

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: A

New Growth Theory was developed by Romer, Lucas and Arrow.

Endogenous (new) growth theory explains long-run growth from within the model rather than by exogenous technical progress. Paul Romer (1986, 1990) modelled growth through knowledge spillovers and research, Robert Lucas (1988) through human capital accumulation, and Kenneth Arrow's earlier 'learning by doing' (1962) is recognised as a forerunner of these models.

Robinson and Kaldor belong to the Cambridge growth tradition, Marx, Schumpeter and Keynes to earlier schools, and Meade to neoclassical growth, so the other groupings are wrong.

Discuss in Forum

27.

The basic needs approach to economic development consists of ..........

A.Basic income and consumption
B.Provision of Minimum Wage
C.Provision of health services, education, housing sanitation, water supply and adequate nutrition
D.Public distribution scheme

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: C

The basic needs approach consists of provision of health services, education, housing, sanitation, water supply and adequate nutrition.

Promoted by the ILO in 1976 and by economists such as Paul Streeten, the approach says development should first ensure that everyone has the minimum requirements of a decent life: food, clothing and shelter, along with essential services such as health care, education, safe water and sanitation.

Basic income, a minimum wage and a public distribution scheme are possible policy tools, but each covers only part of the list; the approach is defined by the full set of basic needs.

Discuss in Forum

28.

In which year the World Development Report had the theme of 'Challenge of Development' ?

A.1990
B.1991
C.1999
D.2000

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: B

The theme 'The Challenge of Development' was in 1991.

The World Bank's World Development Report 1991 was titled 'The Challenge of Development'. It argued for a market-friendly approach in which governments invest in people and infrastructure and provide a stable macroeconomic framework while letting markets work.

The 1990 report was on poverty, and the 1999/2000 and 2000/2001 reports were on entering the 21st century and attacking poverty, so the other years carry different themes.

Discuss in Forum

29.

Which one of the following is not an indicator of the multidimensional Poverty Index ?

A.Health
B.Education
C.Living Standard
D.Maternal Mortality

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: D

The one that is not an indicator of the MPI is maternal mortality.

The global Multidimensional Poverty Index, developed by the Oxford Poverty and Human Development Initiative with UNDP, has three dimensions: health (nutrition, child mortality), education (years of schooling, school attendance) and living standards (cooking fuel, sanitation, drinking water, electricity, housing, assets).

Health, education and living standard are its dimensions, so they are part of the index. Maternal mortality is not among the global MPI's indicators.

Discuss in Forum

30.

The ratio of female to male HDI is known as ..............

A.Sex ratio
B.Gender Development Index
C.Gender Inequality Index
D.Gender Related Development Index

Exam Year(s)

MH SET - 2020, SET Exam - 2020,

Answer: B

It is the Gender Development Index.

Since 2014 the UNDP's Gender Development Index has been calculated as the ratio of the female Human Development Index to the male HDI. A value of 1 means parity; values below 1 show that women lag behind men in health, education and income.

The Gender Inequality Index measures loss of achievement from inequality in reproductive health, empowerment and the labour market, not a ratio of HDIs. The older Gender-related Development Index (1995-2009) adjusted the HDI for gender gaps rather than taking a ratio, and the sex ratio counts females per 1,000 males.

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