Economic Development: Concepts and Theories MCQs 2026

Economic growth primarily refers to

1. Aonly a rise in inequality✓
2. Bonly a fall in population✓
3. Can increase in real output (real GDP) over time✓
4. Donly a change in culture✓

Economic development is broader than growth because it also emphasizes

1. Astructural change, living standards, health, education and poverty reduction✓
2. Bonly nominal GDP spikes✓
3. Conly military spending✓
4. Donly stock indices✓

Per capita income is often used as a crude indicator of

1. Aaverage material living standards✓
2. Bexact happiness of every person✓
3. Conly forest biodiversity✓
4. Donly exchange-rate pegs✓

The Human Development Index (HDI) combines dimensions of

1. Aonly inflation, tariffs and quotas✓
2. Bhealth, education and standard of living✓
3. Conly FDI, remittances and reserves✓
4. Donly money supply components✓

Absolute poverty refers to

1. Aonly feeling poorer than neighbors✓
2. Bonly temporary unemployment✓
3. Cinability to meet a fixed minimum living standard (e.g., basic calorie/needs line)✓
4. Donly lack of luxury brands✓

Relative poverty refers to

1. Abeing poor relative to the society's average or median living standard✓
2. Bhaving zero calories always✓
3. Cidentical to absolute poverty always✓
4. Donly rural landlessness by definition✓

The basic needs approach stresses

1. Aonly maximizing stock prices✓
2. Bonly maximizing tariffs✓
3. Caccess to food, shelter, health, education and essential services✓
4. Donly maximizing money growth✓

Sustainable development means

1. Amaximizing pollution for growth✓
2. Bignoring natural resources✓
3. Cmeeting present needs without compromising future generations' ability to meet theirs✓
4. Dgrowth without any environment concern✓

Rostow's stages of growth include

1. Aonly feudalism and socialism✓
2. Btraditional society, preconditions, take-off, drive to maturity, high mass consumption✓
3. Conly inflation and deflation✓
4. Donly fixed and floating rates✓

In Rostow, the take-off stage is characterized by

1. Acomplete stagnation forever✓
2. Bzero savings always✓
3. Cabolition of industry✓
4. Da rise in productive investment and leading sectors driving sustained growth✓

The Lewis dual-economy model emphasizes

1. Aonly floating exchange rates✓
2. Bonly central-bank independence✓
3. Ctransfer of surplus labor from traditional agriculture to modern industry✓
4. Donly HDI formula weights✓

In the Lewis model, surplus labor in agriculture implies

1. Aagriculture has no workers✓
2. Bindustry cannot hire anyone✓
3. Cwages must be infinite✓
4. Dlabor can move to industry with little loss of agricultural output initially✓

Todaro's migration model highlights that rural-urban migration depends on

1. Aonly rural rainfall✓
2. Bexpected urban income (wage × employment probability), not just the wage gap✓
3. Conly passport fees✓
4. Donly tariff schedules✓

Dependency theory argues that

1. Apoor countries develop only by isolation forever✓
2. Bunderdevelopment is linked to unequal center-periphery relations in the world economy✓
3. Ctrade never matters✓
4. DHDI is the only cause of poverty✓

The vicious circle of poverty suggests that

1. Apoverty automatically ends in one year✓
2. Blow income → low saving/investment → low productivity → low income✓
3. Csaving is always high in poor countries✓
4. Dinvestment never needs capital✓

Big Push theory (Rosenstein-Rodan) argues for

1. Atiny isolated projects only✓
2. Bzero public investment✓
3. Conly agricultural taxes✓
4. Dcoordinated large-scale investment across sectors to overcome indivisibilities✓

Unbalanced growth strategy (Hirschman) emphasizes

1. Aperfect balance in every sector always✓
2. Bno industrial policy ever✓
3. Conly floating currencies✓
4. Dinducing investment via linkages from leading sectors✓

Harrod-Domar growth focuses on the relation among

1. Aonly HDI components✓
2. Bonly tariff elasticities✓
3. Csaving rate, capital-output ratio and growth rate✓
4. Donly remittance seasons✓

Solow neoclassical growth highlights

1. Acapital accumulation, labor and exogenous technical progress (with diminishing returns)✓
2. Bunlimited returns to capital forever without tech✓
3. Conly dual labor markets✓
4. Donly dependency trade✓

Endogenous growth theories stress that

1. Atechnology is always fully exogenous✓
2. Bcapital never matters✓
3. Ctechnological progress can be driven by investment in ideas, human capital and R&D✓
4. Dtrade is irrelevant✓

Human capital refers to

1. Askills, education and health embodied in people that raise productivity✓
2. Bonly physical machines✓
3. Conly foreign reserves✓
4. Donly land area✓

Physical capital includes

1. Amachinery, buildings and infrastructure used in production✓
2. Bonly years of schooling✓
3. Conly life expectancy✓
4. Donly literacy rates✓

Income inequality is commonly measured by the

1. AGini coefficient✓
2. Bonly HDI education index✓
3. Conly current account balance✓
4. Donly reserve months of imports✓

A Gini coefficient closer to 1 indicates

1. Aperfect equality✓
2. Bzero poverty always✓
3. Chigher literacy always✓
4. Dhigher inequality✓

The Kuznets hypothesis suggested that inequality may

1. Afirst rise then fall with development (inverted-U)✓
2. Balways fall monotonically from day one✓
3. Cnever change✓
4. Ddepend only on exchange rates✓

Inclusive growth means

1. Agrowth only for the top 1%✓
2. Bgrowth that broadly shares benefits across society, including the poor✓
3. Cgrowth without jobs by definition✓
4. Dgrowth that raises only asset prices✓

Pro-poor growth is growth that

1. Araises only luxury imports✓
2. Breduces poverty (raises incomes of the poor)✓
3. Cincreases absolute poverty by definition✓
4. Dignores the poor entirely✓

Multidimensional poverty includes deprivations in

1. Ahealth, education and living standards (beyond income alone)✓
2. Bonly stock ownership✓
3. Conly FX reserves✓
4. Donly tariff lines✓

Demographic transition refers to

1. Ashift from high birth/death rates to low birth/death rates with development✓
2. Bonly migration to cities✓
3. Conly currency devaluation✓
4. Donly land reforms✓

Population growth can affect development by

1. Ahaving no economic effects ever✓
2. Bonly changing the exchange rate peg✓
3. Conly setting IMF quotas✓
4. Dinfluencing dependency ratios, saving, investment needs and labor supply✓

Gender inequality can hinder development because it

1. Aalways raises HDI automatically✓
2. Bunderutilizes women's human capital and limits welfare gains✓
3. Chas no link to education✓
4. Donly affects stock markets✓

Environmental Kuznets curve (idea) suggests pollution may

1. Arise forever with no peak✓
2. Bbe unrelated to income always✓
3. Crise then fall with income as societies regulate and shift structure✓
4. Ddepend only on remittances✓

Import-substitution industrialization (ISI) aims to

1. Areplace imports with domestic production behind protective barriers✓
2. Bmaximize free imports always✓
3. Cban all industry✓
4. Dfloat the currency only✓

Export-led growth strategy emphasizes

1. Aclosing the economy completely✓
2. Bexpanding exports as an engine of growth and learning✓
3. Ctaxing exports heavily always✓
4. Dignoring competitiveness✓

Structural transformation typically means

1. Akeeping all labor in farming forever✓
2. Bshift of employment and output from agriculture toward industry and services✓
3. Cabolishing services✓
4. Dfixing only money supply✓

The informal sector is characterized by

1. Aonly multinational FDI plants✓
2. Bonly central-bank operations✓
3. Csmall-scale, often unregistered activities with limited regulation and social protection✓
4. Donly IMF programs✓

Capability approach (Sen) focuses on

1. Aonly GDP maximization✓
2. Bonly money supply targets✓
3. Cpeople's freedoms and capabilities to lead lives they value✓
4. Donly tariff revenue✓

Millennium/Sustainable Development Goals are

1. Aonly bilateral trade deals✓
2. Bonly central-bank charters✓
3. Conly stock-index rules✓
4. Dglobal development agendas with targets on poverty, health, education, environment, etc.✓

Foreign aid can support development if it

1. Aalways guarantees growth regardless of use✓
2. Bnever affects the budget✓
3. Creplaces all domestic saving forever optimally✓
4. Dfinances productive investment and reforms without creating dependency✓

Brain drain refers to

1. Ainflow of unskilled tourists only✓
2. Bimport of machines only✓
3. Crise in literacy only✓
4. Demigration of skilled workers from developing countries✓

Technology transfer in development means

1. Aadoption and adaptation of productive knowledge and techniques from abroad✓
2. Bonly sending remittances✓
3. Conly devaluing currency✓
4. Donly raising tariffs✓

Institutions matter for development because they

1. Ahave no economic role✓
2. Bonly set weather patterns✓
3. Conly determine rainfall✓
4. Dshape incentives for investment, property rights and governance✓

Corruption typically harms development by

1. Araising productivity always✓
2. Blowering inequality always✓
3. Cdistorting incentives, raising costs and undermining public goods✓
4. Dincreasing trust always✓

Microfinance aims to

1. Areplace all commercial banks overnight✓
2. Bprovide small-scale financial services to the poor and microenterprises✓
3. Cfund only mega dams✓
4. Dset exchange rates✓

Rural development strategies often combine

1. Aonly urban stock markets✓
2. Bonly FX intervention✓
3. Cagriculture productivity, infrastructure, education, health and non-farm jobs✓
4. Donly tariff hikes✓

Food security means

1. Aonly exporting all grain✓
2. Breliable access to sufficient, safe and nutritious food✓
3. Conly maximizing cash crops for luxury✓
4. Donly urban restaurants✓

Inequality of opportunity refers to

1. Aunequal chances due to circumstances beyond individual control✓
2. Bonly unequal lottery tickets✓
3. Conly different exchange rates✓
4. Donly different tax forms✓

Green growth emphasizes

1. Agrowth via maximum deforestation✓
2. Bgrowth that is resource-efficient and environmentally sustainable✓
3. Cignoring climate risks✓
4. Dbanning all renewable energy✓

The poverty line is

1. Athe exchange rate peg✓
2. Bthe fiscal deficit limit✓
3. Cthe HDI maximum score✓
4. Da threshold income/consumption below which a person is counted as poor✓

Trickle-down economics claims that

1. Aredistribution is the only growth source✓
2. Bpoverty cannot fall with growth✓
3. Caid never matters✓
4. Dbenefits of growth for the rich eventually spread to the poor✓