MEcon Master of Economics Development Economics 2

Question 1

Microfinance programs primarily aim to:

Accepted Answer

Provide small loans to low-income borrowers excluded from formal credit markets

Answer

Microfinance extends small-scale credit, savings, and insurance services to low-income individuals and micro-entrepreneurs who are typically excluded from conventional banking.

Question 2

Import substitution industrialization (ISI) seeks to promote development by:

Accepted Answer

Protecting nascent domestic industries from foreign competition to foster industrialization

Answer

ISI uses tariffs, quotas, and subsidies to shield domestic industries from foreign competition, allowing them to grow and develop before facing global markets.

Question 3

The Washington Consensus package of economic reforms included all of the following EXCEPT:

Accepted Answer

Capital controls to protect domestic financial markets

Answer

The Washington Consensus promoted open capital accounts and financial liberalization, not capital controls, as part of its market-oriented reform agenda.

Question 4

Randomized controlled trials (RCTs) are used in development economics primarily to:

Accepted Answer

Identify causal impacts of specific development interventions

Answer

RCTs randomly assign individuals or communities to treatment and control groups, enabling credible causal inference about the impact of interventions like cash transfers or vaccination programs.

Question 5

Which statement best describes 'poverty traps' in development economics?

Accepted Answer

Self-reinforcing mechanisms where poverty itself creates barriers to escaping poverty

Answer

Poverty traps arise from threshold effects and non-convexities—the poor lack the minimum resources required to invest in capital that would generate income growth.

MEcon Master of Economics Practice Test

MEcon Master of Economics Practice Test

MEcon Master of Economics Development Economics 2