Economics MCQ Quiz Hub

1. Which of the following is generally regarded as the true index of economic growth?
An increase in national income at constant prices during a year
A sustained increase in real per capita income
An increase in national income at current prices over time
An increase in national income along with a corresponding incease in population

2. The concept of economic growth is:
Identical with the concept of economic development
Narrower than the concept of economic development
Wider as compared to that of economic development
Unrelated to the concept of economic development

3. Which of the following is not an indicator of economically underdeveloped countries?
Low per capita income
High death-rate
Low proportion of labour force in the primary sector
High level of illiteracy

4. The rate of growth of an economy mainly depends upon:
The rate of growth of the labour force
The proportion of national income saved and invested
The rate of technological improvements
All of the above

5. Among the following determinants of growth which is a non-economic factor?
Natural resources
Population growth
Favourable legislation
Capital accumulation

6. Besides increase in output economic development is concerned with:
Inputs and their efficiency
Equitable distribution of income
Life sustenance self-esteem and freedom from want ignorance and squalor
All of the above

7. The stationary state as envisaged by Adam Smith is marked by:
Low rate of profit
Subsistence level wages
High rents
All of the above

8. Which of the following is inconsistent with Adam Smith s theory of development?
Development process is cumulative in nature
There is no limit to the growth process
Capital accumulation and market extension are two prerequisites for output expansion
There should be no government interference in the working of the economy

9. The division of labour according to Adam Smith is limited by:
The extent of the market
The quantity of capital available
Both (a) and (b)
The size of labour force

10. Among the various determinants of the growth of national wealth Adam Smith accorded central place to:
Division of labour
Capital
Natural resources
Technology

11. Who put forward the theory of social dualism?
A.Lewis
G.Myrdal
J.H.Boeke
A.O.Hirshman

12. Who coined the phrase demonstration effect ?
W.W.Rostow
James Duessenberry
R.Nurkse
J.K.Galbraith

13. To achieve full economic growth Malthus laid special emphasis on the proper combination of:
Production and distribution
Natural resources and capital
Labour and technology
Production and trade

14. What according to Malthus puts a stop to the growth process?
Inadequacy of capital accumulation
Deficiency in effective demand
Rapid population growth
Operation of diminishing returns in agriculture

15. Identify the main factor which according to Malthus makes an economy move downwards in the long run to the subsistence level:
Population pressure
Overproduction
Excess savings
Exploitation of workers

16. Which of the following measures according to Malthus would be helpful in raising and maintaining demand at a higher level?
Maintaining unproductive consumption of luxury goods
Expansion of internal and external trade
Ensuring employment to the poor in public works
All of the above

17. Which of the following statements is not correct in the light of the Malthusian theory of growth?
Growth of income cannot take place on its own
Population tends to increase in response to rise in income
There can be no general glut or overproduction in the market
Excess savings on the part of capitalists is the cause of overproduction

18. Which of the following statements is not in agreement with the Malthusian view on economic growth?
The process of economic growth is automatic
Deficiency in effective demand halts the growth process
Lasting equilibrium can only be at the subsistence level
Savings are desirable only upto the limit set by the existence of profitable opportunities for investment

19. Which sector was emphasised most by Ricardo in the context of economic growth?
Trade
Industry
Agriculture
Services

20. In the Ricardian scheme of things savings are provided by:
Labourers
Capitalists
Landlords
Both (b) and (c)

21. Whichone of the following according to Ricardo would form a bottleneck to economic growth?
Shortage of land
Rising rent
Shortage of gold and silver
Rising wage bills

22. Which one of the following statements is not in tune with the Ricardian theory of growth?
Rent tends to rise
Money wages tend to rise
Profits tend to fall
Profits tend to rise

23. Which one of the following is not an assumption of the Ricardian theory?
Rising real wages
Fixity of land
Operation of the law of diminishing returns
Perfect competition

24. Which of the following policy-prescriptions for economic growth was suggested by Ricardo?
Government s active participation in the economic field
Free trade in commodities
Control over population growth
Regulation of competition

25. In the Ricardian system a crucial role in development was assigned to:
Specialisation
Technological changes
Profits
Government

26. In the Ricardian system a crucial role in development was assigned to:
Specialisation
Technological changes
Profits
Government

27. The stationary state according to Malthus and Ricardo is characterised by:
The disappearance of profits
Net investment falling to zero
Wages coinciding with the subsistence level
All of the above

28. Which of the following is not a part of the classical theory of economic development?
Labour supply would increase with rise in wages
Stationary state
Government interference
Capital accumulation is the basic cause of growth

29. Which of the following had the approval of the classical economists (particularly J.S. Mill) as an aid to development?
Subsidizing the poor
Imposition of temporary duties on imports to develop particular industries
Regulation of activities of the rising business class
Appropriating a part of the national product by the government for unproductive uses

30. The classical theory of economic development is of relevance for the less developed countries today because it lays emphasis on:
Need for favourable institutional and social initiatives
Extension of markets
Capital accumulation
All of the above

31. According to the neo-classical theory economic development is:
Gradual
Harmonious
Cumulative
All of the above

32. Unemployment created by some long-term change in demand or technological conditions in an economy is known as:
Frictional unemployment
Cyclical un-employment
Structural unemployment
Disguised unemployment

33. 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
I II IV III
I II III IV
II I IV III
II I III IV

34. 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?
Seven
Five
Four
Three

35. What causes development in terms of Rostow s theory?
Favourable propensities of people
Changing profile of leading sectors of the economy
A sharp rise in investment
All of the above

36. Identify the country which was the first to move to the stage of high mass consumption:
UK
USA
Germany
France

37. The take-off stage is characterised by:
Rise in the rate of productive investment from 5% to over 10% of national income
Development of one or more substantial manufacturing sectors with a high growth rate
Quick emergence of a political social and institutional framework to enable expansion in various fields
All of the above

38. Under the big-push strategy of development large investments are to be directed towards:
Agriculture
Industry
Power
Transport

39. The basic logic behind the big-push strategy of development is related to:
Internal economies
External economies
An optimum combination
Both (a) and (b)

40. In the context of which region was the big push strategy of development formulated?
South Asia
South East Asia
Eastern Europe
East Africa

41. The big-push strategy of development was first advocated by:
Paul N-Rosenstein-Rodan
Simon Kuznets
W.A Lewis
A.O.Hirshman

42. The justification of the big-push strategy which involves concentrated efforts in the form of investments on a large scale is based on:
Indivisibilities of demand
Complimentarily of demand
Skill formulation
All of the above

43. The capital-output ratio in developed countries is:
Generally fluctuating
Fairly stable
Rigidly stationary
Gradually increasing

44. The incremental capital-output ratio (ICOR) refers to the:
Ratio of investment to change in output
Ratio of capital stock to the total output
Marginal productivity of capital
Relationship between investment that is financed by the citizens of a country and the income enjoyed by them

45. The capital-output ratio is determined by:
Sectoral allocation of capital
Level of economic activity
Human and natural resources
All of the above

46. Which growth model inspired the use of capital-output ratio for development planning?
The Harrod-Domar model
Solow s mode
Kaldor s model
Feldman s model

47. The capital-output ratio in a country during the different phases of growth:
Remains unchanged
Fluctuates widely
Changes within narrow limits
Shows a secular declining trend

48. As an aid to development planning much use is being made today of the input-output analysis. Who first used it?
H. Liebenstein
W.W.Leontief
W.A.Lewis
A.O.Hirshman

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

50. Balanced growth implies:
Simultaneous development of a variety of activities which support one another
Equal allocation of resources to different sectors
Different sectors growing at their natural rates of growth
Uniform rate of growth of output over time

51. Development with unlimited supplies of labour hypothesis was originally formulated by:
Gustav Ranis
W.A.Lewis
R. Nurkse
J.Schumpeter

52. Which of the following is not correctly matched?
Big-push strategy: Paul N. Rosenstein- Rodan
Balanced growth theory: R. Nurkse
Development with unlimited supplies of labour: A-0. Hirschman
Critical minimum strategy: H. Uebenstein

53. 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?
30%
20%
15%
12%

54. With economic growth the proportion of labour-force engaged in agriculture:
Increases
Decreases
Remains unaffected
Changes in an uncertain manner

55. A strategy of heavy industry is sometimes preferred for a developing economy because it can:
Generate employment opportunities on a large scale
Provide a strong base for rapid industrialisation
Contain inflationary pressures
Meet deficits in balance of payments in the short-run

56. In which sphere are shadow prices particularly useful?
Project evaluation and cost-benefit analyses
Calculation of surplus value
Sales policy of firms
Consumers equilibrium

57. Identify the economist who first advocated a rolling plan for developing countries?
J. Robinson
N.Kaldor
G.Myrdal
Paul A.Samuelson

58. Which of the following is inconsistent with the Schumpeter s theory of development?
The course of growth is continuous
The output expansion initiated by the entrepreneue increases in size with time making it cumulative
Growth takes place on account of entrepreneurs who with the help of bank credit invest in innovative activity
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

59. According to the Schumpeter s model the innovating entrepreneurs get the necessary finance from:
Voluntary savings
Own resources
Bank credit
Government

60. With which of the following kinds of dualism is H. Myint particularly associated with?
Technological dualism
Geographical dualism
Financial dualism
Social dualism