Chapter 29: Economic Growth and Development

1. Economic growth can be represented by

• A. an outward shift of the production possibility frontier.

• B. an outward shift of the consumption possibility frontier.

• C. a rightward shift of the short run aggregate supply curve.

• D. a rightward shift of the aggregate demand curve.

2. Which of the following statements about economic growth and economic development is CORRECT?

• A. Economic growth and economic development are identical.

• B. Countries with rapid economic growth may not experience economic development.

• C. The definition of economic growth is broader than that of economic development.

• D. None of the above.

3. The table below shows the per capita real GDP and the Human Development Index of two countries in a certain year.

Which of the following statements about the two countries is CORRECT?

• A. Income is more evenly distributed in Country B.

• B. People in Country B have longer lifespans and are better educated.

• C. The living standard of people in Country A is higher.

• D. None of the above.

4. Suppose the Human Development Index of a country increases. Which of the following are the possible reasons for such an increase?

(1) People live longer than before.

(2) The education level of the general public increases.

(3) Income is more evenly distributed.

(4) People are healthier than before.

• A. (1) and (4) only

• B. (1), (2) and (3) only

• C. (1), (2) and (4) only

• D. (2), (3) and (4) only

5. Which of the following would NOT affect the economic growth of a country?

• A. a change in production technology

• B. a change in the price level

• C. a change in the amount of human capital

• D. a change in the amount of man-made resources

6. Which of the following policies can attract more foreign direct investment?

(1) lowering government rent

(2) offering tax exemption to foreign companies

(3) lowering the minimum wage rate of domestic workers

• A. (1) and (2) only

• B. (1) and (3) only

• C. (2) and (3) only

• D. (1), (2) and (3)

7. Which of the following is LEAST likely to boost economic growth?

• A. The government increases the subsidy on education.

• B. The government removes most of the trade barriers.

• C. More resources are allocated by government commands.

• D. The government provides more funding to universities for research and development.

8. Which of the following are likely to be favourable to the economic growth of developing countries?

(1) Many multinationals move their headquarters to developing countries from their home countries.

(2) Many developing countries take actions to tackle corruption.

(3) Developing countries start using trade barriers to protect their infant industries.

• A. (1) and (2) only

• B. (1) and (3) only

• C. (2) and (3) only

• D. (1), (2) and (3)

9. Which of the following are likely to be effects of brain drain on the economic growth of a country?

(1) per capita GDP decreases

(2) labour productivity becomes lower

(3) the pace of research and development increases

• A. (1) and (2) only

• B. (1) and (3) only

• C. (2) and (3) only

• D. (1), (2) and (3)

10. Refer to the following table.

Which of the following is LEAST likely to be the consequence brought by the above change in the growth rate of real GDP?

• A. a lower living standard

• B. more serious pollution

• C. a wider income gap between the rich and the poor

• D. a lower crime rate