Theories of Economic Development

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1.What is the fundamental distinction between capitalism and socialism?

Capitalism takes advantage of laborers, whereas socialism takes advantage of property holders.Capitalism depends on market forces for economic decisions, while socialism employs centralized planning.Capitalism expands through rent-seeking activities, whereas socialism grows under government control.Capitalism bases choices on consumer preferences, while socialism focuses on producer interests.

2.According to Baran, what factors contribute to the underdevelopment of Asia, Africa, and Latin America?

Foreign monopolistic enterprisesConservative ruling groupsFragile local middle classAll of these factors combined

3.What does the acronym OECD represent?

Organization for Economic Cooperation and DevelopmentOil Exporting Countries DevelopmentOrganization for Environmental Cooperative DepartmentOpen Economies Caucus on Development

4.According to Rosenstein-Rodan, where does a significant indivisibility primarily exist?

5.What does the Vicious Circle theory suggest about poverty?

A nation remains poor due to low productivity despite high levels of savings.Wealthier countries tend to reduce their savings rates over time.Poverty sustains itself through interconnected cycles affecting both supply and demand.Less Developed Countries (LDCs) have a large market size.

6.Which factors contributed to the decline of feudalism?

Only the movement of serfs to urban areas and factory competitionFactory competition with handicrafts and manorial production, along with expanded trade and new international marketsThe migration of serfs to towns, factory competition, and increased trade and discoveryThe emergence of business corporations alone

7.Which of the following concepts were supported by Adam Smith?

Only I and IIOnly II and IIIOnly I, II, and IIIAll of the following: I, II, III, and IV

8.Which of the following best describes the characteristics of a theory?

It is a structured explanation of the connections between economic variables.It clarifies causal links between variables and their effects.It forms the foundation for developing economic policies.It accounts for every factor that impacts economic growth.None of the above.

9.According to the Harrod-Domar growth model, economic growth depends on which of the following relationships?

positively influenced by savings and negatively influenced by the capital-output ratiopositively influenced by the capital-output ratio and negatively influenced by savingsnegatively influenced by both savings and the capital-output ratiopositively influenced by both savings and the capital-output rationo relationship with savings or the capital-output ratio

10.Baran's Neo-Marxist theory has been challenged for overlooking the likelihood that power often is what?

rooted in a coalition between landowners and rural farmersfounded on a partnership between peasants and foreign capitalistsshifted from one ruling elite to another during revolutionsoriginated from internal groups opposing nationalism

11.What are some common critiques of Rostow’s model of development stages?

The stages cannot be empirically verified with easeHistorical data often disputes the prerequisites for the takeoff phaseTraits attributed to a specific stage also appear in other stagesAll of the above statements are valid criticisms

12.What is the overall outcome of Adam Smith's concept of the invisible hand in a competitive market?

Everyone gains when individuals pursue their own self-interestAll participants will see their profits rise in an open marketIndividuals must focus on maximizing economic expansionPeople ought to act in ways that advance the common good

13.According to the Lewis model, how does economic growth begin in a developing country?

When the average labor productivity in agriculture is negativeWhen the labor supply curve slopes downwardWhen the marginal productivity of labor in industry is zero or very lowWhen there exists a traditional agricultural sector alongside a capitalist industrial sectorWhen capital accumulation happens solely in the agricultural sector

14.According to prominent dependency theorist Andre Gunder Frank, which of the following economic processes have played a role in causing underdevelopment?

15.What term do proponents use to describe the coordinated investment of capital across multiple industries simultaneously?

balanced growthcapitalizationcapital elasticityindivisibilities

16.Which of the following correctly lists Rostow's stages of economic growth?

Preconditions for takeoff, takeoff, drive to maturity, and the era of creative destructionTraditional society, preconditions for takeoff, takeoff, drive to maturity, and the stage of high mass consumptionPreconditions for consumption, replication, drive to maturity, and the phase of high mass consumptionLearning curve, high mass consumption period, post-takeoff, and drive to maturity

17.Which of the following did NOT influence Karl Marx's theory of historical materialism?

The impact of the French RevolutionThe emergence of capitalist industrial productionUprisings related to politics and labor movementsAn increasing emphasis on spiritual rationalismNone of the above

18.Identify the individual who is not considered a classical economist from the list below.

Adam SmithThomas Robert MalthusJohn Stuart MillJohn Maynard Keynes

19.Which economic theory was predominantly favored by development economists during the 1980s and 1990s, a time characterized by conservative economic policies in much of the West and Japan?

20.According to surplus labor theories, what is assumed about labor in less developed countries (LDCs)?

LDCs suffer from excessive population growthLabor has no role in producing output in LDCsThe marginal productivity of labor in LDCs is nearly zeroThere is a significant level of unemployment in urban areas of LDCs