Question

Choose the best answer to each

question.

Consider a country with an ICOR of 8.0 in which

GDP rises by 4% per annum to prevent a decline

in per-capita income. This requires a saving rate of

(a) 12%

(6) 32%

(c) 28%

(d) 2%

On which of the following does the

neoclassical counter-revolution school most blame

underdevelopment?

(a) misquided government policies (b) relatively

rigid cultural traditions

(c) the legacy of colonialism

(d) unfair trade practices on the part of developed

countries

In the public choice (or new political economy)

approach to development the emphasis is on

(a) growth in the rural sector.

(b) the self-interested behavior of public officials

(c) the dependence of LDCs on former colonial

powers.

(d) the inherent efficiency of developing country

markets.

Answer 1

1. This requires a saving rate of 4×8 = 32%.

So, the correct answer is (b).

2. The neoclassical counter-revolution school most blame underdevelopment on misquided government policies.

So, the correct answer is (a).

3. In the public choice (or new political economy) approach to development the emphasis is on the self-interested behavior of public officials.

So, the correct answer is (b).