MEcon Master of Economics Development Economics

Question 1

What does the Human Development Index (HDI) measure?

Accepted Answer

A composite of health, education, and income

Answer

GDP per capita only

Answer

Military strength and political stability

Answer

Trade surplus and foreign currency reserves

Question 2

Which concept describes poor countries growing faster than rich ones after controlling for structural differences, leading to income convergence?

Accepted Answer

Conditional convergence

Answer

Absolute divergence

Answer

The resource curse

Answer

Malthusian trap

Question 3

Paul Rosenstein-Rodan's 'big push' theory argues that economic development requires:

Accepted Answer

Coordinated large-scale investment to overcome poverty traps

Answer

Small incremental private investments spread over time

Answer

Unilateral trade liberalization as the primary catalyst

Answer

Foreign aid channeled exclusively through NGOs

Question 4

The 'resource curse' in development economics refers to the paradox that:

Accepted Answer

Resource-rich countries often experience slower economic growth

Answer

Natural resources are depleted too quickly in poor countries

Answer

Environmental degradation inevitably follows industrialization

Answer

Agricultural exports crowd out manufacturing development

Question 5

Amartya Sen's 'capability approach' defines development as:

Accepted Answer

Expanding people's real freedoms and capabilities to live fulfilling lives

Answer

Maximizing aggregate GDP growth rates

Answer

Building export-oriented industries to achieve middle-income status

Answer

Reducing government expenditure to spur private investment

Question 6

What is 'Dutch Disease' in the context of development economics?

Accepted Answer

Real exchange rate appreciation that harms non-resource export sectors after a resource boom

Answer

A financial contagion originating from Dutch banking failures

Answer

Over-investment in agricultural sectors at the expense of industry

Answer

Fiscal deficits caused by excessive welfare spending

Question 7

W. Arthur Lewis's two-sector model of economic development assumes that:

Accepted Answer

Surplus labor in agriculture can shift to industry without raising wages above subsistence

Answer

Agricultural and industrial sectors have equal marginal productivity

Answer

Industrial wages must always exceed agricultural wages by a substantial premium

Answer

Technology is the sole driver of structural transformation