Economic Development Quiz

What is the main difference between GDP and GNP in Malaysia?

• GDP includes income from abroad, while GNP does not.

• GNP includes income earned by Malaysians abroad, while GDP does not.

• GDP measures only government spending, while GNP measures total economic output.

• GNP is always higher than GDP.

Answer explanation

The main difference is that GNP includes income earned by Malaysians abroad, while GDP measures the total economic output within Malaysia, regardless of who earns it.

Which of the following best represents economic development in Malaysia?

• Higher palm oil exports

• Increase in Proton car production

• Increase in per capita income, literacy rate, and healthcare services

• Lower inflation rate

Answer explanation

Economic development is best represented by improvements in quality of life indicators, such as per capita income, literacy rate, and healthcare services, which reflect overall societal progress rather than just economic output.

Malaysia's largest contributor to GDP is:

• Agriculture

• Manufacturing

• Services

• Mining

Answer explanation

The largest contributor to Malaysia's GDP is the services sector, which encompasses various industries such as finance, tourism, and retail, significantly outpacing agriculture, manufacturing, and mining in economic contribution.

If Malaysia's inflation rate increases rapidly, which of the following is the most likely effect?

• Higher purchasing power of Malaysians

• Increase in the value of the Malaysian Ringgit

• Rising cost of living and reduced purchasing power

• More job opportunities

Answer explanation

An increase in Malaysia's inflation rate typically leads to a rising cost of living, which reduces the purchasing power of Malaysians. This means they can buy less with the same amount of money.

Which of the following is NOT an indicator of economic development?

• Unemployment rate

• GDP per capita

• Number of shopping malls built

• Literacy rate

Answer explanation

The number of shopping malls built is not a direct indicator of economic development, as it can reflect consumer preferences rather than overall economic health. In contrast, unemployment rate, GDP per capita, and literacy rate are key indicators.

Which of the following is a key difference between economic growth and economic development?

• Economic growth focuses on GDP, while economic development includes improvements in living standards.

• Economic development only happens in developed countries.

• Economic growth is measured by the unemployment rate.

• Economic development does not require economic growth.

Answer explanation

The correct choice highlights that economic growth is primarily about increasing GDP, while economic development encompasses broader improvements in living standards, such as health, education, and quality of life.

The Human Development Index (HDI) measures development using:

• Inflation, employment, and interest rates

• Life expectancy, education, and income per capita

• Number of shopping malls built in a country

• The country's total exports and imports

Answer explanation

The Human Development Index (HDI) measures development through life expectancy, education, and income per capita, reflecting the overall well-being and quality of life in a country.

Which sector contributes the most to Malaysia's GDP?

• Agriculture

• Services

• Mining

• Manufacturing

Answer explanation

The Services sector is the largest contributor to Malaysia's GDP, encompassing finance, tourism, and retail, which drive economic growth more than Agriculture, Mining, or Manufacturing.

Malaysia's GDP is calculated using the Expenditure Approach as follows:

• GDP = Government Spending + Investment - Imports + Consumption

• GDP = Government Spending + Consumption + Exports - Imports

• GDP = Consumption + Investment + Government Spending + (Exports - Imports)

• GDP = Income + Taxes - Subsidies

Answer explanation

The correct formula for GDP using the Expenditure Approach includes Consumption, Investment, Government Spending, and net Exports (Exports - Imports). Thus, GDP = Consumption + Investment + Government Spending + (Exports - Imports).

If inflation in Malaysia rises rapidly, which of the following is a likely impact?

• Increase in purchasing power

• Lower cost of living

• Decrease in the value of the Malaysian Ringgit

• Decrease in the price of goods

Answer explanation

Rapid inflation typically decreases the value of a currency, including the Malaysian Ringgit, as purchasing power declines. This makes imports more expensive and can lead to a weaker currency overall.