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Worksheets4.3.3 Development Strategies
Total questions: 30
Worksheet time: 20mins
Interventionist believe that ...
allowing markets to operate with minimal government interference will create the best outcomes for society
the price mechanism is central to the allocation of scarce resources
the free market if left to itself will lead to market failures i.e. a misallocation of resources
decisions regarding what, how and for whom to produce should be determined by the choices of economic agents driven by the pursuit of self-interest
Free market economists believe that ...
allowing markets to operate with minimal government interference will create the best outcomes for society
the planning mechanism is central to the allocation of scarce resources
the free market if left to itself will lead to the optimum allocation of resources
decisions regarding what, how and for whom to produce should be determined by the government in society's interest
Which of the following are benefits of dependency on the primary sector for an LEDC? (Choose more than one option)
Labour intensive
Absorbs low skilled labour
PED < - 1
Comparative advantage
Which of the following are problems of dependency on the primary sector for an LEDC? (Choose more than one option)
Unstable output due to natural environment
Protectionism in developed countries can lead to unfair competition
PED < - 1
Comparative advantage
The Prebisch-Singer Hypothesis states that:
the price of commodities will increase relative to manufactured products over time
the price of commodities will decline relative to manufactured products over time
the price of manufactured goods will decline relative to commodities over time
the price of commodities relative to manufactured products will remain stable over time
Which of the following statements regarding buffer stock schemes is true? (Choose more than one option)
Government sets a target price (TP) which will enable farmers to make an acceptable return
The ceiling price is the highest market price the product can reach before triggering government intervention
The floor price is lowest market price the product can reach before triggering government intervention
The government sell surpluses when price reaches ‘floor’. and purchase surpluses when price reaches ‘ceiling’
Which of the following statements is true regarding maximum prices? (Choose more than one option)
A maximum price is set below market equilibrium
It makes the product less affordable
It can lead to shortages
It generates lower returns for producers
Which of the following statements is true regarding minimum prices? (Choose more than one option)
A minimum price is set above market equilibrium
It makes the product less affordable
It can lead to shortages
It generates higher returns for producers
Which of the following statements are true regarding the removal of a subsidy on fuel? (Choose more than one option)
It will shift the supply curve to the left
It will increase consumer surplus
It will increase producer surplus
It will increase inflationary pressure
Which of the following statements is true regarding fair trade? (Choose more than one option)
It ensure producers receive a ‘fair’ price – usually above market price
It helps farmers plan ahead and invest
It can lead to undersupply
It pays a social premium to improve social welfare in rural communities
According to Arthur Lewis...
the transfer of workers from high productivity (modern) sectors to low productivity (traditional) sectors would lead to economic growth
investment is required for economic growth and savings are required for investment
the price of commodities will decline relative to manufactured goods over time
the transfer of workers from low productivity (traditional) sectors to secondary/ tertiary (modern) sectors would lead to economic growth
Which of the following are advantages of industrialisation as a development strategy?
Higher value added
Better paid work
Higher export earnings
Higher export earnings
All of the above
Which of the following are disadvantages of industrialisation as a development strategy? (Choose more than one option).
Loss of farmland
Pressure on urban resources
Negative externalities
Less income volatility
All of the above
Which of the following are advantages of infrastructure as a development strategy? (Choose more than one option).
Speeds up communications increasing efficiency
Faster delivery times
Negative multiplier effects
Attract FDI
Facilitates international trade
Which of the following are problems associated with infrastructure projects? (Choose more than one option).
Local populations might be displaced
Increases government borrowing
Negative externalities
Attract FDI
Facilitates international trade
Which of the following are benefits of attracting FDI as a development strategy? (Choose more than one option).
FDI is an injection in circular flow
FDI fills the savings gap
FDI shifts the AD curve to the left
FDI reduces the need for government spending (borrowing)
Which of the following are problems associated with attracting FDI as a development strategy? (Choose more than one option).
It can stifle local entrepreneurs
Can lead to the exploitation of workers
Profits might be repatriated
Creates positive multiplier effects
Lowers tax revenues
Joint Ventures (JV) occur where businesses agree to join forces for a particular project
True
False
An advantage of a joint venture is... (choose more than one option)
they share risks and rewards
creates more jobs
access to new markets
they can be short lived
A disadvantage of a joint venture is ... (choose more than one option)
clash of cultures
part of the profits repatriated
both businesses will bring more knowledge and skills into the new project
subsidies might be offered to attract firms
Each year, _ billion people travel internationally. __% of these people go to developing countries, representing $___ billion flowing from rich to poor countries which is _ times larger than the global aid budget.
2; 200; 150; 8
1; 40; 300; 3
5; 25; 250; 5
3; 10; 800; 2
Benefits of tourism include... (choose more than one option)
improvements in balance of payments
diversification of industrial base
positive multiplier effects
leakages from circular flow
increases social costs
Problems of tourism include... (choose more than one option)
displacement of local farmers
negative externalities
income inelastic
higher government revenue
local inflation
Which of the following are benefits of aid for an LEDC? (Choose more than one option).
Fills savings gap allowing for greater public sector investment
Provide funds for investment in infrastructure
May delay necessary structural reforms
Inefficient and corrupt governments may embezzle funds
Which of the following are problems of aid for an LEDC? (Choose more than one option).
It is an injection into the circular flow of income
Can lead to aid dependency
Can be ineffective if used to service debt repayments
Access to funds without domestic crowding out
Mozambique has a debt to GDP ratio of ...
84%
94%
104%
124%
Which of the following are arguments against debt forgiveness? (Choose more than one option).
Governments often encouraged to take out high loans
Moral hazard
Reduces fiscal discipline
Reward for ineffective government policies
Microfinance refers to small-scale lending to poor households. Benefits of microfinance include (choose more than one option):
Allows poor households access to credit leading to borrowing to start up businesses
Funds often targeted at women reducing gender inequality
Might be used to finance consumption rather than production
Success by one individual will unlock more funds for use by others in the local community
The main roles of the IMF include (choose more than one option):
promote global financial stability
help deal with economic crisis by providing international coordination, loans and advice
ease temporary balance of payments crises by providing financial assistance
provides low interest loans, interest free credit and grants to help LEDCs improve health, education and infrastructure
NGOs consist of private organisations e.g. social enterprises such which implement development projects such as education programmes, health care initiatives, community projects, as well as providing humanitarian assistance and famine relief. Which of the following is NOT an NGO?
Oxfam
Medicins Sans Frontier
UNICEF
Save the Chickens
