A Level Economics: Practice Questions on Economic Development

MCQs

Economic development refers to the sustained, long-term process of improving various aspects of an economy to enhance the standard of living, welfare, and overall well-being of the people within a country. What is one of the key factors involved in economic development?

1. a) Increasing poverty and inequality b) Reducing the production of goods and services c) Improving access to education and healthcare d) Decreasing GDP growth

Solution: c) Improving access to education and healthcare

2. Which of the following best describes national income? a) The total income earned by a country's residents from their economic activities abroad. b) The total income earned by all individuals and businesses within a country during a specific period. c) The income earned by foreign residents working within a country. d) The income earned by the government from taxes.

Solution: b) The total income earned by all individuals and businesses within a country during a specific period.

3. Economic development goes beyond mere economic growth (increases in national income) and encompasses broader social and human development goals. Which of the following is NOT one of the interconnected factors involved in economic development? a) Growth of GDP b) Human Development c) Infrastructure and Technology d) Increasing poverty and inequality

Solution: d) Increasing poverty and inequality

4. What is the main difference between Gross Domestic Product (GDP) and Gross National Product (GNP)? a) GDP includes foreign income earned by a country's residents, while GNP does not. b) GNP includes foreign income earned by a country's residents, while GDP does not. c) GDP focuses on economic activities within the country's borders, while GNP includes income earned by foreign residents within the country's borders. d) There is no difference between GDP and GNP; they are synonymous.

Solution: b) GNP includes foreign income earned by a country's residents, while GDP does not.

5. Purchasing Power Parity (PPP) is a concept used in economics to compare the relative purchasing power of different countries' currencies. What does PPP take into account when making these comparisons? a) Exchange rates only b) The cost of living and price levels in each country c) Nominal GDP d) The level of government intervention in the economy

Solution: b) The cost of living and price levels in each country

6. What does the Human Development Index (HDI) consider to measure development more comprehensively? a) GDP growth rate b) Life expectancy, education, and per capita income c) Access to natural resources d) Total national income

Solution: b) Life expectancy, education, and per capita income

7. While changes in national income (measured by GDP) are important indicators of economic performance, they have limitations in capturing the overall level of development in a country. What is one of the limitations of GDP? a) It doesn't consider human development factors like education and healthcare. b) It reflects the overall well-being of the population accurately. c) It includes income earned by the country's residents from their economic activities abroad. d) It accounts for non-market activities like household work or volunteering.

Solution: a) It doesn't consider human development factors like education and healthcare.

8. Which of the following is NOT a challenge faced by Less Economically Developed Countries (LEDCs) in their economic development? a) Limited access to technology and capital b) Inadequate infrastructure c) Low population growth d) High levels of public sector debt in comparison to More Economically Developed Countries (MEDCs)

Solution: c) Low population growth

9. What approach involves reducing government intervention in the economy and promoting free markets to enhance economic development? a) International aid and debt relief b) Government intervention and industrial policies c) Liberalization and free-market reforms d) None of the above

Solution: c) Liberalization and free-market reforms

10. The Human Development Index (HDI) is one of the measures used to assess a country's development. Which of the following factors does the HDI take into account? a) GDP per capita and income distribution b) Life expectancy, education, and per capita income c) Gross Domestic Product (GDP) and Gross National Product (GNP) d) Purchasing Power Parity (PPP) and exchange rates

Solution: b) Life expectancy, education, and per capita income

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Long Answer Questions

1. What are the differences between economic growth and economic development, and why is the latter considered a more comprehensive measure of a country's progress?

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3. How does increasing GDP contribute to economic development, and what challenges exist in achieving sustainable growth and social inclusivity?

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5. How can we address GDP's limitations in capturing income distribution, non-market activities, and overall population well-being when evaluating national income as a development indicator?

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7. Does the Human Development Index (HDI) complement GDP as a measure of development; what dimensions does it consider for a more comprehensive evaluation?

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9. What are the implications of using Purchasing Power Parity (PPP) adjustments when comparing economic indicators between countries, and how does it aid in understanding relative purchasing power and living standards across different economies?