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Problemset Title Introductory Text Self-Assessment Quiz Question 1 Structural change refers to when Hint: Type: Feedback for Multiple Choice all incorrect answers: Answer Graded As Feedback all sectors change structurally positively towards Incorrect overall economic growth. Question 2 sectors of the economy change in the way they structure their methods of production. Incorrect sectors in the economy expand while others shrink. Correct None of the above. Incorrect The most significant structural change is from Hint: Type: Feedback for Multiple Choice all incorrect answers: Answer Graded As Feedback a low-productivity to a high-productivity service Incorrect economy. Question 3 a low-productivity to a high-productivity manufacturing economy. Incorrect a low-productivity to a high-productivity agricultural economy. Incorrect a low-productivity agricultural economy to a high-productivity industrial economy. Correct Shifts from high-tech industry to the service sector usually take place during the ________ stages of development, while the shift from an agricultural to an industrial economy is the most structural change at Type: Multiple Choice _________ stages of development. Hint: Feedback for all incorrect answers: Answer Graded As earlier; later Incorrect later; earlier Correct earlier; middle Incorrect middle; earlier Incorrect Feedback Question 4 The following quote from our textbook best describes what is happening in _____________ based on the ____________________ model: “[h]undreds of millions of peasants have left the countryside to Type: Multiple Choice find jobs in the modern manufacturing sector”. Hint: Feedback for all incorrect answers: Answer Graded As China; Stiglitz Incorrect South Korea; Stiglitz Incorrect China; Lewis Correct India; Lewis Incorrect Feedback Question 5 One of the main differences between the two concave production functions in the traditional and modern sectors is that the marginal product of labor in the agricultural (traditional) sector Type: Multiple Choice Hint: Feedback for all incorrect answers: Question 6 Answer Graded As is always decreasing. Incorrect becomes negative after a level LA*. Incorrect is zero after a level LA*. Correct is always increasing at a decreasing rate after a level LA*. Incorrect Feedback When the marginal product of labor in the traditional sector is positive, the modern sector needs to pay a wage w* Type: Hint: Multiple Choice Feedback for all incorrect answers: Question 7 Type: Multiple Choice Answer Graded As higher than the wage in agriculture to attract workers. Correct lower than the wage in agriculture to attract workers. Incorrect equal to the wage in agriculture to attract workers. Incorrect regardless of the wage in agriculture. Incorrect Feedback The following are limitations that developing countries face that do not allow a perfect application of the Lewis model given its assumptions: Hint: Feedback for all incorrect answers: Answer Graded As scarcity of labor, income not being reinvested Incorrect into the domestic economy, inefficient management that limits profits in the modern sector, and rural-urban migration that does not translate into the absorption of the rural migrants efficiently. scarcity of capital, income being reinvested into Correct the domestic economy, inefficient management that limits profits in the modern sector, and ruralurban migration that does not translate into the absorption of the rural migrants efficiently. scarcity of labor, income being reinvested into Incorrect the domestic economy, inefficient management that limits profits in the modern sector, and ruralurban migration that does not translate into the absorption of the rural migrants efficiently. scarcity of capital, income not being reinvested into the domestic economy, efficient management that allows for great profits in the Incorrect Feedback modern sector, and rural-urban migration that does not translate into the absorption of the rural migrants efficiently. Question 8 In practice, migration from the traditional sector to the urban sector, Hint: Type: Feedback for Multiple Choice all incorrect answers: Question 9 Answer Graded As translates into greater average annual growth rate of GDP per capita. Incorrect does not translate into greater average annual growth rate of GDP per capita. Incorrect affects the measure of countries’ urbanization. Incorrect b. and c. are correct. Correct Feedback Lower quality of institutions in a country may cause Hint: Type: Feedback for Multiple Choice all incorrect answers: Answer Graded As capital inflow that strengthens the modern sector. Incorrect capital flight that does not allow Lewis’ reinvestment of profits in the domestic modern sector. Correct capital flight that allows Lewis’ reinvestment of Incorrect profits abroad. capital inflow that allows reinvestment of profits Incorrect in both the domestic and the foreign economies. Question 10 The Harris-Todaro model analyzes Hint: Type: Feedback for Multiple Choice all incorrect answers: Feedback Question 11 Type: Multiple Choice Answer Graded As workers’ migration decisions based on a comparison of the city’s benefits versus the country-side advantages. Incorrect workers’ migration decisions based on a comparison of lifetime-expected income in the rural versus urban areas. Correct employers’ hiring decisions between workers from urban versus rural areas. Incorrect workers’ migration decisions based on a comparison of the cost-of-living in the urban versus rural areas. Incorrect Feedback According to Harris-Todaro, if wages in urban areas are higher than rural income, there will be Hint: Feedback for all incorrect answers: Answer Graded As no migration to the urban areas due to the distance they are from the rural areas. Incorrect Feedback excess migration to the urban areas that will lead Incorrect to full urban employment. excess migration to the urban areas that will lead Incorrect only to urban under employment. excess migration to the urban areas that will lead Correct to urban unemployment. Question 12 Urbanization observed world-wide in the last decades reflects: Hint: Type: Feedback for Multiple Choice all incorrect answers: Answer Graded As Feedback healthy economic development. Incorrect shortage of migration. Incorrect excess migration. Correct the unavoidable growth of manufacturing. Question 13 Type: Multiple Choice Incorrect Balanced growth results in ______________, whereas balanced growth relates to ________________. Hint: Feedback for all incorrect answers: Answer Graded As Feedback equilibrium over time in all sectors; surplus in all sectors over time. Incorrect disequilibrium over time in all sectors; surplus in Incorrect all sectors over time. equilibrium over time in all sectors; shortage in all sectors over time. Incorrect disequilibrium over time in all sectors; surplus in Correct some sectors and shortage in other sectors of the economy over time. Question 14 Type: Multiple Choice Question 15 Type: Multiple Choice Theories that state that development is successful when sectors expand simultaneously on a very large scale are called: Hint: Feedback for all incorrect answers: Answer Graded As Sectoral Symmetry Theories. Incorrect Government Push Theories. Incorrect Big Push Theories. Correct Simultaneous Growth Theories. Incorrect Feedback When each sector in the economy makes independent decisions but one sector’s decision depends on another sector’s decision, there may be Hint: Feedback for all incorrect answers: Answer Graded As Feedback Question 16 economies of scale. Incorrect diminishing returns to scale. Incorrect coordination problems. Correct better horizontal integration. Incorrect Import substitution strategies focus on Hint: Type: Feedback for Multiple Choice all incorrect answers: Question 17 Type: Multiple Choice Answer Graded As finding new strategies to increase industrial imports as percentage of GDP. Incorrect substituting industrial exports for imports in a country. Incorrect developing the country’s domestic industry to substitute industrial imports with domestic production. Correct None of the above. Incorrect In the 1960s, the following areas experienced success with export promotion strategies: Hint: Feedback for all incorrect answers: Answer Graded As Japan, United States, Taiwan, and South Korea. Incorrect Question 18 Feedback Japan, United States, South Korea, and Hong Kong. Incorrect Japan, Taiwan, South Korea, and Hong Kong. Correct Japan, Taiwan, Brazil, and Hong Kong. Incorrect The Prebisch-Singer hypothesis states that Hint: Type: Feedback for Multiple Choice all incorrect Feedback answers: Question 19 Answer Graded As countries that specialize in exports of manufacturing experience decreasing terms of trade. Incorrect countries that specialize in exports of primary commodities experience decreasing terms of trade. Correct countries that specialize in imports of primary commodities experience decreasing terms of trade. Incorrect countries that specialize in imports of manufacturing commodities experience decreasing terms of trade. Incorrect Feedback The Prebisch-Singer hypothesis has been Hint: Type: Feedback for Multiple Choice all incorrect answers: Answer Graded As always proven empirically true throughout time for all developing countries. Incorrect Feedback proven wrong as prices of primary commodities Incorrect have been increasing over the years. partially proven right as terms of trade are more Correct volatile for countries that specialize in the export of a particular natural resource. never proven true throughout history. Question 20 Incorrect The effectiveness of foreign aid Hint: Type: Feedback for Multiple Choice all incorrect answers: Answer Graded As has not been questioned among development economists due to its clearly positive role in the Incorrect Feedback path of prosperity of the developing country. has been determined to only harm the incentives Incorrect to grow and become independent in the developing country. has been defended by William Easterly as a means for the developing country to rise out of poverty. Incorrect has been defended by Jeffrey Sachs as a means Correct for the developing country to rise out of poverty.