R4RIN – MCQs, Mock Tests | Economics Economic Growth and Development

Which of the following is generally regarded as the true index of economic growth?

1. An increase in national income at constant prices during a year
2. A sustained increase in real per capita income
3. An increase in national income at current prices over time
4. An increase in national income along with a corresponding incease in population

✅ Correct Answer: 2

The concept of economic growth is:

1. Identical with the concept of economic development
2. Narrower than the concept of economic development
3. Wider as compared to that of economic development
4. Unrelated to the concept of economic development

✅ Correct Answer: 2

Which of the following is not an indicator of economically underdeveloped countries?

1. Low per capita income
2. High death-rate
3. Low proportion of labour force in the primary sector
4. High level of illiteracy

✅ Correct Answer: 3

The rate of growth of an economy mainly depends upon:

1. The rate of growth of the labour force
2. The proportion of national income saved and invested
3. The rate of technological improvements
4. All of the above

✅ Correct Answer: 4

Among the following determinants of growth which is a non-economic factor?

1. Natural resources
2. Population growth
3. Favourable legislation
4. Capital accumulation

✅ Correct Answer: 3

Besides increase in output economic development is concerned with:

1. Inputs and their efficiency
2. Equitable distribution of income
3. Life sustenance self-esteem and freedom from want ignorance and squalor
4. All of the above

✅ Correct Answer: 4

The stationary state as envisaged by Adam Smith is marked by:

1. Low rate of profit
2. Subsistence level wages
3. High rents
4. All of the above

✅ Correct Answer: 4

Which of the following is inconsistent with Adam Smith s theory of development?

1. Development process is cumulative in nature
2. There is no limit to the growth process
3. Capital accumulation and market extension are two prerequisites for output expansion
4. There should be no government interference in the working of the economy

✅ Correct Answer: 2

The division of labour according to Adam Smith is limited by:

1. The extent of the market
2. The quantity of capital available
3. Both (a) and (b)
4. The size of labour force

✅ Correct Answer: 3

Among the various determinants of the growth of national wealth Adam Smith accorded central place to:

1. Division of labour
2. Capital
3. Natural resources
4. Technology

✅ Correct Answer: 1

Who put forward the theory of social dualism?

1. A.Lewis
2. G.Myrdal
3. J.H.Boeke
4. A.O.Hirshman

✅ Correct Answer: 3

Who coined the phrase demonstration effect ?

1. W.W.Rostow
2. James Duessenberry
3. R.Nurkse
4. J.K.Galbraith

✅ Correct Answer: 2

To achieve full economic growth Malthus laid special emphasis on the proper combination of:

1. Production and distribution
2. Natural resources and capital
3. Labour and technology
4. Production and trade

✅ Correct Answer: 1

What according to Malthus puts a stop to the growth process?

1. Inadequacy of capital accumulation
2. Deficiency in effective demand
3. Rapid population growth
4. Operation of diminishing returns in agriculture

✅ Correct Answer: 2

Identify the main factor which according to Malthus makes an economy move downwards in the long run to the subsistence level:

1. Population pressure
2. Overproduction
3. Excess savings
4. Exploitation of workers

✅ Correct Answer: 1

Which of the following measures according to Malthus would be helpful in raising and maintaining demand at a higher level?

1. Maintaining unproductive consumption of luxury goods
2. Expansion of internal and external trade
3. Ensuring employment to the poor in public works
4. All of the above

✅ Correct Answer: 4

Which of the following statements is not correct in the light of the Malthusian theory of growth?

1. Growth of income cannot take place on its own
2. Population tends to increase in response to rise in income
3. There can be no general glut or overproduction in the market
4. Excess savings on the part of capitalists is the cause of overproduction

✅ Correct Answer: 3

Which of the following statements is not in agreement with the Malthusian view on economic growth?

1. The process of economic growth is automatic
2. Deficiency in effective demand halts the growth process
3. Lasting equilibrium can only be at the subsistence level
4. Savings are desirable only upto the limit set by the existence of profitable opportunities for investment

✅ Correct Answer: 1

Which sector was emphasised most by Ricardo in the context of economic growth?

1. Trade
2. Industry
3. Agriculture
4. Services

✅ Correct Answer: 3

In the Ricardian scheme of things savings are provided by:

1. Labourers
2. Capitalists
3. Landlords
4. Both (b) and (c)

✅ Correct Answer: 2

Whichone of the following according to Ricardo would form a bottleneck to economic growth?

1. Shortage of land
2. Rising rent
3. Shortage of gold and silver
4. Rising wage bills

✅ Correct Answer: 1

Which one of the following statements is not in tune with the Ricardian theory of growth?

1. Rent tends to rise
2. Money wages tend to rise
3. Profits tend to fall
4. Profits tend to rise

✅ Correct Answer: 4

Which one of the following is not an assumption of the Ricardian theory?

1. Rising real wages
2. Fixity of land
3. Operation of the law of diminishing returns
4. Perfect competition

✅ Correct Answer: 1

Which of the following policy-prescriptions for economic growth was suggested by Ricardo?

1. Government s active participation in the economic field
2. Free trade in commodities
3. Control over population growth
4. Regulation of competition

✅ Correct Answer: 2

In the Ricardian system a crucial role in development was assigned to:

1. Specialisation
2. Technological changes
3. Profits
4. Government

✅ Correct Answer: 3

In the Ricardian system a crucial role in development was assigned to:

1. Specialisation
2. Technological changes
3. Profits
4. Government

✅ Correct Answer: 3

The stationary state according to Malthus and Ricardo is characterised by:

1. The disappearance of profits
2. Net investment falling to zero
3. Wages coinciding with the subsistence level
4. All of the above

✅ Correct Answer: 4

Which of the following is not a part of the classical theory of economic development?

1. Labour supply would increase with rise in wages
2. Stationary state
3. Government interference
4. Capital accumulation is the basic cause of growth

✅ Correct Answer: 3

Which of the following had the approval of the classical economists (particularly J.S. Mill) as an aid to development?

1. Subsidizing the poor
2. Imposition of temporary duties on imports to develop particular industries
3. Regulation of activities of the rising business class
4. Appropriating a part of the national product by the government for unproductive uses

✅ Correct Answer: 2

The classical theory of economic development is of relevance for the less developed countries today because it lays emphasis on:

1. Need for favourable institutional and social initiatives
2. Extension of markets
3. Capital accumulation
4. All of the above

✅ Correct Answer: 4

According to the neo-classical theory economic development is:

1. Gradual
2. Harmonious
3. Cumulative
4. All of the above

✅ Correct Answer: 4

Unemployment created by some long-term change in demand or technological conditions in an economy is known as:

1. Frictional unemployment
2. Cyclical un-employment
3. Structural unemployment
4. Disguised unemployment

✅ Correct Answer: 3

Arrange the following Rostow s stages of economic growth in their proper sequence: I Traditional society II. Take-off stage III. Age of mass consumption IV. Drive to maturity

1. I II IV III
2. I II III IV
3. II I IV III
4. II I III IV

✅ Correct Answer: 3

How many stages of economic growth were defined and analysed by Rostow which all economies are supposed to pass through in the course of their development?

1. Seven
2. Five
3. Four
4. Three

✅ Correct Answer: 2

What causes development in terms of Rostow s theory?

1. Favourable propensities of people
2. Changing profile of leading sectors of the economy
3. A sharp rise in investment
4. All of the above

✅ Correct Answer: 4

Identify the country which was the first to move to the stage of high mass consumption:

1. UK
2. USA
3. Germany
4. France

✅ Correct Answer: 2

The take-off stage is characterised by:

1. Rise in the rate of productive investment from 5% to over 10% of national income
2. Development of one or more substantial manufacturing sectors with a high growth rate
3. Quick emergence of a political social and institutional framework to enable expansion in various fields
4. All of the above

✅ Correct Answer: 4

Under the big-push strategy of development large investments are to be directed towards:

1. Agriculture
2. Industry
3. Power
4. Transport

✅ Correct Answer: 2

The basic logic behind the big-push strategy of development is related to:

1. Internal economies
2. External economies
3. An optimum combination
4. Both (a) and (b)

✅ Correct Answer: 2

In the context of which region was the big push strategy of development formulated?

1. South Asia
2. South East Asia
3. Eastern Europe
4. East Africa

✅ Correct Answer: 3

The big-push strategy of development was first advocated by:

1. Paul N-Rosenstein-Rodan
2. Simon Kuznets
3. W.A Lewis
4. A.O.Hirshman

✅ Correct Answer: 1

The justification of the big-push strategy which involves concentrated efforts in the form of investments on a large scale is based on:

1. Indivisibilities of demand
2. Complimentarily of demand
3. Skill formulation
4. All of the above

✅ Correct Answer: 4

The capital-output ratio in developed countries is:

1. Generally fluctuating
2. Fairly stable
3. Rigidly stationary
4. Gradually increasing

✅ Correct Answer: 2

The incremental capital-output ratio (ICOR) refers to the:

1. Ratio of investment to change in output
2. Ratio of capital stock to the total output
3. Marginal productivity of capital
4. Relationship between investment that is financed by the citizens of a country and the income enjoyed by them

✅ Correct Answer: 1

The capital-output ratio is determined by:

1. Sectoral allocation of capital
2. Level of economic activity
3. Human and natural resources
4. All of the above

✅ Correct Answer: 4

Which growth model inspired the use of capital-output ratio for development planning?

1. The Harrod-Domar model
2. Solow s mode
3. Kaldor s model
4. Feldman s model

✅ Correct Answer: 1

The capital-output ratio in a country during the different phases of growth:

1. Remains unchanged
2. Fluctuates widely
3. Changes within narrow limits
4. Shows a secular declining trend

✅ Correct Answer: 3

As an aid to development planning much use is being made today of the input-output analysis. Who first used it?

1. H. Liebenstein
2. W.W.Leontief
3. W.A.Lewis
4. A.O.Hirshman

✅ Correct Answer: 2

Which of the following statements is incorrect?

1. The essence of balanced growth is that the economy should advance at a steady rate with savings equal to investment
2. The thesis of development with unlimited supplies of labour was originally formulated by R. Nurkse
3. The capital-output ratio is the inverse of the annual rate of return on productivity of capital
4. E.D. Domar assumed that full employment of labour and capital occurred simulataneously

✅ Correct Answer: 2

Balanced growth implies:

1. Simultaneous development of a variety of activities which support one another
2. Equal allocation of resources to different sectors
3. Different sectors growing at their natural rates of growth
4. Uniform rate of growth of output over time

✅ Correct Answer: 1

Development with unlimited supplies of labour hypothesis was originally formulated by:

1. Gustav Ranis
2. W.A.Lewis
3. R. Nurkse
4. J.Schumpeter

✅ Correct Answer: 2

Which of the following is not correctly matched?

1. Big-push strategy: Paul N. Rosenstein- Rodan
2. Balanced growth theory: R. Nurkse
3. Development with unlimited supplies of labour: A-0. Hirschman
4. Critical minimum strategy: H. Uebenstein

✅ Correct Answer: 2

If the capital-output ratio is 4:1 and the annual growth rate of population is 2.5% what will be required rate of investment in the economy in order to achieve 3% growth per annum in per capita income?

1. 30%
2. 20%
3. 15%
4. 12%

✅ Correct Answer: 1

With economic growth the proportion of labour-force engaged in agriculture:

1. Increases
2. Decreases
3. Remains unaffected
4. Changes in an uncertain manner

✅ Correct Answer: 2

A strategy of heavy industry is sometimes preferred for a developing economy because it can:

1. Generate employment opportunities on a large scale
2. Provide a strong base for rapid industrialisation
3. Contain inflationary pressures
4. Meet deficits in balance of payments in the short-run

✅ Correct Answer: 2

In which sphere are shadow prices particularly useful?

1. Project evaluation and cost-benefit analyses
2. Calculation of surplus value
3. Sales policy of firms
4. Consumers equilibrium

✅ Correct Answer: 1

Identify the economist who first advocated a rolling plan for developing countries?

1. J. Robinson
2. N.Kaldor
3. G.Myrdal
4. Paul A.Samuelson

✅ Correct Answer: 3

Which of the following is inconsistent with the Schumpeter s theory of development?

1. The course of growth is continuous
2. The output expansion initiated by the entrepreneue increases in size with time making it cumulative
3. Growth takes place on account of entrepreneurs who with the help of bank credit invest in innovative activity
4. Capitalism destroys itself by being successful through the erosion of its institutions by the hostility of its intellectuals and other elite classes and also by the weakening of entrepreneurial inno

✅ Correct Answer: 1

According to the Schumpeter s model the innovating entrepreneurs get the necessary finance from:

1. Voluntary savings
2. Own resources
3. Bank credit
4. Government

✅ Correct Answer: 3

With which of the following kinds of dualism is H. Myint particularly associated with?

1. Technological dualism
2. Geographical dualism
3. Financial dualism
4. Social dualism

✅ Correct Answer: 3