ASRB NET and ARS / SMS / STO recruitment · India · Agricultural Scientists Recruitment Board (ICAR)
Original practice questions written to the published syllabus · not past papersWhat development means, how it is measured, the classic growth models, and the roles of state, market, civil society and international institutions.
In the exams: agricultural economics PhD entrance and fellowship examinations, development (heavy); central bank officer recruitment economic and social issues papers (reported)
How our questions for ASRB NET and ARS / SMS / STO recruitment spread across the units of Development Economics. Difficulty: 25 easy, 45 medium, 2 hard.
| Indicators of development | 15 | |
| Classical theories of development | 11 | |
| Solow growth model | 8 | |
| Comparative development | 7 | |
| Harrod-Domar growth model | 6 | |
| Role of the state and markets | 6 | |
| International development institutions | 6 | |
| Role of civil society and institutions | 5 | |
| Conceptions of development | 4 | |
| Growth and development distinguished | 4 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
Denis Goulet's three 'core values' of development, popularised in Todaro's textbook, are
D. sustenance, self-esteem and freedom from servitude
Goulet (The Cruel Choice, 1971) named sustenance (meeting basic needs), self-esteem (being a person of worth) and freedom from servitude (the ability to choose). Health, education and income are the HDI dimensions, a common confusion.
Further reading: Goulet, D. The Cruel Choice, 1971
The Human Development Index was first published by UNDP in
A. 1990
The first Human Development Report (1990), led by Mahbub ul Haq, introduced the HDI. In 2010 the method changed to a geometric mean and new education indicators, which students sometimes mistake for the start date.
Further reading: UNDP Human Development Report 1990
A country has life expectancy at birth of 72.5 years. Using the HDI goalposts of 20 and 85 years, its health index is
C. 0.808
Health index = (72.5 - 20)/(85 - 20) = 52.5/65 = 0.808. Dividing 72.5 by 85 gives 0.853 (ignoring the minimum), and 0.725 treats 100 as the maximum with no minimum. 0.618 subtracts the minimum only in the numerator (52.5/85).
Further reading: UNDP HDR Technical Notes
'Technological dualism', in which a capital-intensive modern sector with fixed factor proportions coexists with a labour-intensive traditional sector, is associated with
C. Benjamin Higgins
Higgins explained unemployment in developing countries by fixed factor proportions in the modern sector. Boeke's dualism was social (different motives in the traditional sector); Lewis's was labour-surplus dualism; Prebisch was a structuralist on the terms of trade.
Further reading: Todaro and Smith, Economic Development; Ray, Development Economics
In the Harrod-Domar model, the saving rate is 24 per cent and the capital-output ratio is 4. The growth rate of output is
B. 6 per cent
g = s/v = 0.24/4 = 0.06, or 6 per cent. Multiplying (0.24 x 4 = 0.96, or 96 per cent) and subtracting (20) are the typical slips; 16.7 per cent is v/s.
Further reading: Harrod (1939); Domar (1946)
The saving rate is 20 per cent, the capital-output ratio is 4 and population grows at 2 per cent. Output per head grows at approximately
C. 3 per cent
Output growth = 0.20/4 = 5 per cent; per-capita growth is about 5 - 2 = 3 per cent (exactly 1.05/1.02 - 1 = 2.94 per cent). 5 per cent ignores population growth; 7 adds it. 4.5 per cent subtracts population growth from the saving rate ((0.20 - 0.02)/4).
Further reading: Todaro and Smith, Economic Development; Ray, Development Economics
In the Solow model the steady state is stable because
B. diminishing returns make actual investment exceed break-even investment below k* and fall short above k*
With diminishing returns, s f(k) is concave while (n + g + delta) k is a straight line, so they cross once and k moves toward k* from either side. A fixed capital-output ratio is Harrod-Domar, which produces instability; endogenous population is Nelson's trap.
Further reading: Todaro and Smith, Economic Development; Ray, Development Economics
A country's export price index is 90, its import price index 120 and its export volume index 110 (base year = 100). Its net barter terms of trade and income terms of trade are
A. 75 and 82.5
NBTT = 90/120 x 100 = 75. Income terms of trade = NBTT x export volume / 100 = 75 x 1.10 = 82.5. 133 inverts the ratio, and 147 carries the inversion through (133 x 1.10); 110 is export volume alone; 82.5 and 75 in reverse order confuses the two.
Further reading: Todaro and Smith, Economic Development; Ray, Development Economics
Import-substituting industrialisation typically harmed agriculture mainly because
D. protection of industry and overvalued exchange rates taxed agricultural exports indirectly
Protecting manufacturing raised the prices farmers paid for inputs and consumer goods, while overvalued exchange rates cut the domestic-currency value of farm exports: an anti-export, anti-agriculture bias documented by Krueger, Schiff and Valdes.
Further reading: Krueger, Schiff and Valdes, The Political Economy of Agricultural Pricing Policy, World Bank
Theodore Schultz's 1961 presidential address to the American Economic Association is best known for
A. treating education and health as investment in human capital
'Investment in Human Capital' (1961) argued that spending on education, health and training is investment that raises productivity; Becker (1964) developed the theory. The other options belong to Rosenstein-Rodan, Chenery-Strout and Rostow.
Further reading: Schultz, T.W. Investment in Human Capital, AER 1961
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