FALL 2015 – ECO 330. 01 This homework is due at the beginning of class on October 8, 2015

FALL 2015 – ECO 330. 01 – HOMEWORK 1This homework is due at the beginning of class on October 8, 2015. Late submissions andsubmissions by email will not be accepted. Your homework must be typed and stapled, hand writtensubmissions will not be graded. Multiple Choice – 2 points each(1) Which of the following is a major argument of trade pessimists?(a) Increased productivity of developed country agriculture(b) Increased efficiency in industrial use of raw materials(c) Protectionism against labor-intensive manufacturers(d) All of the above(2) Most important role of the World Trade Organization is(a) To promote market oriented economic policies(b) To settle trade disputes(c) To provide development assistance(d) To help countries choose the appropriate level of a tariff or quota(3) The(a)(b)(c)(d)S-curve is used to illustrateThe typical path taken by the current account over timeEconomic fluctuations of the economyThe typical growth path of a developing economyThe existence of multiple equilibria(4) Which of the following is a criticism of the neo-classical school’s approach?(a) Markets are not competitive in developing countries(b) Externalities are common in developing countries(c) Inequality may worsen when interventions are removed in developing countries(d) All of the above(5) The(a)(b)(c)(d)neo-classical school supportsTrade restrictionsState-owned enterprisesEliminating government regulationsLimitations on foreign investors12FALL 2015 – ECO 330. 01 – HOMEWORK 1(6) A situation in which government intervention in the economy worsens the economic outcomeis termed(a) Neo-classical failure(b) Socialism(c) Government failure(d) Dependency revolution(7) The supply curve of labor to industry in the Lewis model is horizontal if there is surpluslabor in agriculture. This condition persists as long as(a) The marginal product of labor is less than the average product of labor in agriculture(b) The marginal product of labor in agriculture is less than the marginal product of laborin industry(c) There are diminishing returns to labor in agriculture(d) The marginal product of labor in agriculture is zero(8) Which of the following is an assumption of the Lewis two-sector model?(a) Surplus labor in industry(b) Positive marginal product of labor in agriculture(c) An upward sloping labor supply curve in industry(d) None of the above(9) A newly industrialized country is(a) The same as a high income country(b) Any country that has experienced sustained growth in industry(c) A special classification given to some upper-middle income countries that have achievedrelatively advanced manufacturing sectors(d) Any country that has moved out of lower income status(10) The number of units of developing country currency required to purchase a basket of goodsand services in a developing country that costs one dollar in the U. S. is given by(a) GNP price deflator(b) HDI ranking(c) Purchasing power parity(d) the exchange rateFALL 2015 – ECO 330. 01 – HOMEWORK 13(11) Most successful examples of modern economic growth have occurred in a country with(a) A temperate-zone climate(b) A market economy(c) Exports of manufactured goods(d) All of the above(12) Which of the following is not an indicator that is used to compute the Human DevelopmentIndex?(a) Life expectancy at birth(b) Real income per capita(c) Infant mortality rate(d) Years of schooling of adults(13) Development economics is the study of the(a) Alleviation of absolute poverty(b) Transformation of institutions(c) Allocation of resources in developing countries(d) All of the above(14) Which of the following is not an important objective of development?(a) Increases in per capita income(b) The expansion of available choices(c) Increases in individual and national self-esteem(d) All of the above are important objects of development(15) What ideas are most closely associated with Nobel prize-winning economist Amartya Sen?(a) The Linear Stages of Growth(b) The Capabilities approach(c) Coordination failure approach(d) Role of increasing returns in economic developmentShort Answers – Answer any two, 15 points eachExplain why a country’s gains from trade may not accrue to nationals. Indicate the differentialeffects of GNP and GDPExplain the basic idea behind the Big Push model?What are the main indicators that make up the New Human Development Index?4FALL 2015 – ECO 330. 01 – HOMEWORK 1Longer Answers – Answer any two, 20 points eachDiscuss the relationship between a developing country’s emphasis on the export of traditionalcommodities and: (1) Export earnings stability(2) Comparative advantage(3) Terms of tradeApply what you have learned about development and development and development theories tospeculate on the following thought experiment: What, if anything, might be different about today’sinternational economic order if the Spanish had colonized North America and the English had colonized South America?Comment on the following statement: The level and growth rate of real GDP per capita canbe a misleading indicator of development. At the same time, countries that experience sustainedincreases in real GDP per capita over time will tend to be more developed.