Question

7. The gross domestic product (GDP) in a Fultonland in 2012 is S8 billion. The income received in 2012 by Fultonland residents from investment in Kingsland is S1 billion. The income received in 2012 by Kingsland residents from investments in Fultonland is S500 million. Using these abovementioned figures, the gross national income (GNI) for Fultonland in 2012 is: a S8.5 billion b. $8.6 billion c. $8.41 billion d. cannot be determined from the information given. 8. According to the Lewis Model, the rate of growth (or speed of growth) of output and employment in the modern, industrialized sector of an underdeveloped economy is due, in part to: a. surplus labor in the agricultural sector and marginal labor productivity in the agricultural sector b. marginal productivity in the industrialized sector c. rate of industrial investment and capital accumulation d. rate of industrial investment and surplus labor 9. The main contributor to growth for developing countries is: a. capital accumulation. b. capital productivity c. labor productivity d. political stability 10. One of the characteristics of the poor is that they are: a. more likely to be employed in the modern industrial sector. b. more likely to come from small families. c. more likely to be well educated. d. more likely to live in a rural area. 11. Suppose that Slovenia undertakes a policy to increase its saving rate. This policy will likely: a have no impact on GDP growth. b. lead to higher GDP growth for a few years. c. lead to higher GDP growth for d. lead to a permanently higher growth rate. a period of several decades. 12. The Capabilities Approach places focus on: Violence against land reform Freedom that a person has in terms of the choice of functionings given personal attributes and command over commodities unfreedoms to have the right to education All of the above a. b. c. d. 13. Economies with higher growth rates tend to be those that have: a. large amounts of natural resources. b. a stable government that protects property rights. c. high levels of government regulation. d. a large defense budget.

Answer 1

7. The answer will be Option Number a) $8.5 billion

GDP = 8 billion

Net Factor Income from Abroad = $1 billion – 500 million = 500 million

GNP = GDP + NFIA

GNP = 8 billion + 500 million or 8.5 billion

9. The main contributor to growth for developing countries is

Option Number a. Capital Accumulation

Capital Formation or accumulation is the key for the growth in developing countries. It is nothing but investment in tangible means of production.

10. One of the characteristic of poor is that they are

Correct Answer will be Option d) More likely to live in rural areas.

13. Economies with higher growth rates tends to be those that have

Correct Answer – Option b) a stable government that protects property rights.

A country which protects rights and having good governance makes stronger economic performance. Property rights are always associated with growth rate.