Chapter: Economic Growth
1.

Which of the following is generally regarded as the true index of economic growth?

A. An increase in national income at constant prices during a year
B. A sustained increase in real per capita income
C. An increase in national income at current prices over time
D. An increase in national income along with a corresponding increase in population
Answer» B. A sustained increase in real per capita income
2.

The concept of economic growth is

A. Identical with the concept of economic development
B. Narrower than the concept of economic development
C. Wider as compared to that of economic development
D. Unrelated to the concept of economic development
Answer» B. Narrower than the concept of economic development
3.

Economic growth is measured as a percentage change in

A. Gross Domestic Product
B. Gross National Product
C. Both (a) and (b
D. Government expenditure
Answer» C. Both (a) and (b
4.

The concept of economic growth is more relevant for

A. Developed countries
B. Underdeveloped countries
C. European countries
D. All of the above
Answer» A. Developed countries
5.

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

A. Increase in literacy level
B. Low growth of population
C. Low proportion of labour force in the primary section
D. Decrease in inequality of income
Answer» C. Low proportion of labour force in the primary section
6.

The rate of growth of the economy mainly depends upon

A. The rate of growth of labour force
B. The proportion of national income saved and invested
C. The rate of technological improvements
D. All of the above
Answer» D. All of the above
7.

Among the following determinants of growth, which is a non-economic factor?

A. Natural resources
B. Population growth
C. Favourablelegislation
D. Capital accumulation
Answer» C. Favourablelegislation
8.

Besides increase in output, economic development is concerned with

A. Inputs and their efficiency
B. Equitable distribution of income
C. Life sustenance, self-esteem and freedom from want, ignorance and squalor
D. All of the above
Answer» D. All of the above
9.

The most simple and popular method of measuring economic development is to calculate the trend of Gross National Product (GNP) at

A. Current prices
B. Constant prices
C. Both of the above
D. None of the above
Answer» B. Constant prices
10.

The most important factor in economic development is

A. Quality of human resources
B. Quality of natural resources
C. Quality of governance
D. Quality of banking system
Answer» A. Quality of human resources
11.

When economic development takes place

A. Share of services in GDP increases
B. Share of agriculture in GDP increases
C. Share of industry in GDP increases
D. Both (a) and (c
Answer» D. Both (a) and (c
12.

Which of the following is acting as an obstacle to economic development

A. Shortage of money
B. Urbanization
C. Political instability
D. Shortage of labour
Answer» C. Political instability
13.

The Solow’s growth model assumes that the two factors of production labour and capital are paid according to

A. their marginal physical productivities
B. the skills of the labour
C. the quality of the output
D. None of the above
Answer» A. their marginal physical productivities
14.

Neo-classical growth model considered two-factor production function with

A. Technology and output
B. Capital and labour
C. Labour and technology
D. Capital and technology
Answer» B. Capital and labour
15.

Technological progress helps in

A. Increase in overall productivity
B. Economic growth
C. Both of the above
D. None of the above
Answer» C. Both of the above
16.

The technique of production in which the amount of capital used per unit of labour is larger than that of labour is known as

A. Capital-intensive technique
B. Modern technique
C. Scientific technique
D. All of the above
Answer» A. Capital-intensive technique
17.

Economic growth can be measured in terms of changes in

A. GDP per head in agricultural sector
B. GDP per head of working population
C. Real national income per head
D. All of the above
Answer» C. Real national income per head
18.

Assuming that 3 units of capital are required to produce 1 unit of output, then capitaloutput ratio would be

A. 3 ∶ 2
B. 3 ∶ 1
C. 3 ∶ 3
D. 3 ∶ 4
Answer» B. 3 ∶ 1
19.

With economic growth, the proportion of labour-force engaged in agriculture

A. Increases
B. Decreases
C. Remains unaffected
D. Changes in uncertain manner
Answer» B. Decreases
20.

A strategy of heavy industry is sometimes preferred for a developing economy because it can

A. generate employment opportunities on a large scale
B. provide a strong base for rapid industrialization
C. contain inflationary measures
D. both (a) and (b
Answer» D. both (a) and (b
21.

The incremental capital-output ration (ICOR) refers to the

A. Ratio of investment to change in output
B. Ratio of capital stock to the total output
C. Marginal productivity of capital
D. Financed by the citizens of a country and the income enjoyed by them
Answer» A. Ratio of investment to change in output
22.

Capital-output ratio is determined by

A. Sectoral allocation of capital
B. Level of economic activity
C. Human and natural resources
D. All of the above
Answer» D. All of the above
23.

Which of the following is the indicators of economics growth

A. National income
B. Per capita income
C. Per capita consumption
D. All of the above
Answer» D. All of the above
24.

According to the neo-classical theory, economic development is

A. Gradual
B. Harmonious
C. Cumulative
D. All of the above
Answer» D. All of the above
25.

Which growth model inspired the use of capital-output ratio for development planning?

A. Harrod-Domar model
B. Solow model
C. Kaldor model
D. Feldman model
Answer» A. Harrod-Domar model
26.

Harrod-Domar model of economic growth is based on

A. Underveloped economy
B. Advanced capitalist economy
C. Developing economy
D. All of the above
Answer» B. Advanced capitalist economy
27.

Harrod-Domar model operates in a

A. Closed economy
B. Open economy
C. Both open and closed economy
D. None of the above
Answer» A. Closed economy
28.

Harrod- Domar model is based on

A. Two distinct rates of growth
B. Three distinct rates of growth
C. Four distinct rates of growth
D. Five distinct rates of growth
Answer» B. Three distinct rates of growth
29.

Solow’s model of long-run growth is an improvement over that of

A. J.E. Meade
B. Harrod-Domar
C. J. Robinson
D. A.K.Sen
Answer» B. Harrod-Domar
30.

The major difference between Harrod-Domar and Solow models of growth lies in

A. Returns to scale
B. Returns to variable factors
C. Substitutability between labour and capital
D. Growth of income
Answer» C. Substitutability between labour and capital
31.

Which growth model analyses the contribution of technological progress to the overall growth rate

A. Solow model
B. Kaldor model
C. Harrod model
D. All of the above
Answer» A. Solow model
32.

The saving ratio in Solow’s model is

A. Constant
B. Negative
C. Flexible
D. None of the above
Answer» A. Constant
33.

Which of the following models formed the basis of India’s First Five Year Plan

A. Malanobis model
B. Feldman model
C. Harrod-Domar model
D. Leontief model
Answer» C. Harrod-Domar model
34.

Which of the following models uses three distinct concepts of growth?

A. Ramsey model
B. Harrod-Domar model
C. Solow model
D. Lewis model
Answer» B. Harrod-Domar model
35.

The sequence of the three growth rates in Harod-Domar model is

A. actual, warranted and natural growth rates
B. natural,warranted and actual growth rates
C. warranted, actual and natural growth rates
D. natural,actual and warranted growth rates
Answer» A. actual, warranted and natural growth rates
36.

Which of the following models makes the assumption of constantsaving-income ratio?

A. Kaldor model
B. Leontief model
C. Hoarrod-Domar model
D. Joan Robinson model
Answer» C. Hoarrod-Domar model
37.

For neo-classical theorists, economic under- development is the product of which of the following

A. Inappropriate economic policies and too much state interference in the economy
B. Barriers against free trade
C. Low prices for raw-materials
D. Both (a) and (b
Answer» D. Both (a) and (b
38.

In Harrod-Domar model, the actual growth rate represented by G, is determined by

A. Aggregate demand and aggregate supply
B. Saving ratio and the capital-output ratio
C. Increase in productive capacity
D. Net autonomous investment
Answer» B. Saving ratio and the capital-output ratio
39.

According to Harrod-Domar model, once the steady growth is interrupted and the economy falls into disequilibrium, cumulative forces tend to perpetuate divergence thereby leading to

A. inflation in the economy
B. either secular deflation or secular inflation
C. Low economic growth rates
D. All of the above
Answer» B. either secular deflation or secular inflation
40.

In Solow’s model of economic growth, production takes places under

A. Increasing returns to scale
B. Constant returns to scale
C. decreasing returns to scale
D. None of the above
Answer» B. Constant returns to scale
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