Growth and Development-Online Practice Exam 8
Growth and Development-Online Practice Exam 8

Growth and Development-Online Practice Exam 8

NET / SET Online Practice Exams

Growth and Development

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Multi-choice 8

Question

1. In the Lewis model of economic development, the sector generates and reinvests surplus and, in turn, absorbs labour withdrawn from the subsistence sector. The process continues till-

Answers

MPL In the capitalist sector is greater than 0

MPL in the capitalist sector is less than MPL in the subsistence sector

MPL = APL in the capitalist sector 

MPL in the capitalist sector is greater than wage rate in that sector and MP, in the subsistence sector is now positive

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2. One of the following statements correctly defines the term Natural Rate of Growth?

Answers

It is the minimum rate at which output can be advanced with full employment of labour

It is the natural rate at which output can be advanced with full employment of labour

It is the actual rate at which output can be advanced with full employment of labour

It is the maximum rate at which output can be advanced with full employment of labour

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Question

3. An underdeveloped economy is generally characterised by a-

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High utilisation of existing capital in the economy

Coexistence of under-utilised labour with unexploited national and other resources

High ratio of industrial output to total output 

High ratio of commercial farming to subsistence farming

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Question

4. In the early stages of planning, industrialisation is weighted in favour of consumer goods industries rather than capital goods industries. This hypothesis was advocated by-

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W.G. Hoffmann

Chenery

Kuznets

A. Gerschenkron

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5. The basic principle emphasised by Harrod and Domar and incorporated in all modern growth theories is the-

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Crowding out effect of net investment 

Saving effect a net investment

Dual effect of net investment

Capacity effect of net investment

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Question

6. In the dual economy, as viewed by Lewis, the capitalist sector absorbs the surplus labour provided the-

Answers

Capitalist surplus is generated

Capitalist surplus is generated and reinvested

Subsistence sector has an elastic labour supply the capitalist surplus is generated and reinvested

The subsistence sector has an inelastic labour

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Question

7. The Physical Quality of Life Index (PQLI) is based on

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Percentage of literacy, infant mortality and life expectancy

Adequate supply of food, water shelter and health services

Provision for sanitation, education for all welfare measures

All of the above 

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Question

8. During a recession, consumers typically react to falling incomes by-

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Increasing the fraction of consumption devoted to durable goods

Replacing worn-out durables quickly before incomes fall further

 Reducing purchases of non-durables and services more quickly than purchases of devoted durables

Reducing the fraction of consumption devoted to durable goods

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Question

9. Which of the following are true about disguised unemployment?

  1. It represents potential savings.
  2. The marginal productivity of labour is zero or extremely low.
  3. It is due to the existence of joint family system.
  4. It is confined to the rural areas.

Select the correct answer using the codes given below-

Codes:

Answers

I, II, III and IV

III and IV

I, II, and III

I, and IV

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Question

10. In Keynes’ General Theory, investment and savings are brought to equality primarily through changes in the-

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Level of prices

Rate of Interest

National Income

Income velocity of money

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