SLU AFEPA European MSc in Agricultural, Food & Environmental Policy Analysis · Sweden / EU · SLU with Bonn, UCLouvain and Cattolica
Original practice questions written to the published syllabus · not past papersHow economies grow and develop, what part agriculture plays as they transform, and how farm, trade, food, fiscal and climate policies differ across the world's agricultural economies, compared through cases from every continent.
In the exams: Economic and social issues papers in agricultural development bank and central bank officer recruitment (heavy); agricultural economics PhD entrance and fellowship examinations, development and policy units (heavy); agricultural, food and development policy modules in master's programmes on several continents (present)
How our questions for SLU AFEPA European MSc in Agricultural, Food & Environmental Policy Analysis spread across the units of Economic Development and Agricultural Economies of the World. Difficulty: 3 easy, 34 medium, 14 hard.
| Agricultural policy regimes and producer support | 9 | |
| Country case comparisons | 8 | |
| Economics of climate change and natural resources | 7 | |
| Agricultural trade and the WTO | 5 | |
| Comparative development paths | 4 | |
| Poverty and inequality | 4 | |
| Rural labour, migration and remittances | 4 | |
| Food security and nutrition | 3 | |
| Measuring growth and development | 2 | |
| Structural transformation and the role of agriculture | 2 | |
| Public finance and monetary basics | 2 | |
| Development institutions: World Bank, IMF, FAO and IFAD | 1 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
A country's producer support estimate is 30 billion currency units, the value of farm production at farm gate is 150 billion and budgetary payments to producers are 30 billion. The percentage PSE is closest to:
C. 16.7 per cent
%PSE = PSE / (value of production + budgetary payments) × 100 = 30 / 180 × 100 = 16.7 per cent. Dividing by 150 alone gives 20.0, leaving payments out of gross farm receipts; 25.0 divides 30 by 120; 83.3 is the non-support share of receipts.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
Farmers receive 240 currency units per tonne of rice including per-tonne payments, and the border price is 200. The producer nominal protection coefficient (NPC) and its meaning are:
A. 1.20, farmers receive 20 per cent above world prices
NPC = producer price including output payments / border price = 240/200 = 1.20, so producers get 20 per cent more than at world prices. 0.83 inverts the ratio; NPC says nothing about a retail consumer subsidy; and support as a share of receipts is the %PSE, a different indicator.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
Since about 1990 the largest fall in the number of people in extreme poverty has occurred in:
D. East Asia, led by China
East Asia, led by China, accounted for most of the global decline in extreme poverty, followed by South Asia. Extreme poverty is now increasingly concentrated in Sub-Saharan Africa and in fragile and conflict-affected states.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
The Maastricht Treaty reference values for European Union member states' public finances are:
A. a general government deficit of 3 per cent and debt of 60 per cent of GDP
The Maastricht criteria, carried into the Stability and Growth Pact, set reference values of 3 per cent of GDP for the deficit and 60 per cent for gross debt. The other combinations are not EU rules.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
A boom in natural gas exports causes the real exchange rate to appreciate and agricultural exports to decline. This is an example of:
A. Dutch disease
Dutch disease, named after the Netherlands after its gas discoveries, describes a resource boom that appreciates the real exchange rate and squeezes other tradable sectors such as agriculture and manufacturing. The J-curve concerns the time path of the trade balance after depreciation; Balassa–Samuelson concerns productivity-driven price levels.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
At a discount rate of 5 per cent a year, the present value of 1,000 currency units of avoided climate damage received in 30 years is closest to:
A. 231 currency units
PV = 1,000 / (1.05)^30 = 1,000 / 4.322 = 231. 400 uses simple rather than compound discounting, 1,000/(1 + 0.05 × 30); 4,322 compounds forward instead of discounting; 850 has no basis in the formula.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
In several regions, groundwater for irrigation is pumped with flat-rate or free electricity, and water tables are falling. The core economic problem is that:
D. pumping's private marginal cost is far below its social cost
With zero marginal power cost and open access to the aquifer, each farmer pumps until the private marginal benefit is near zero, ignoring the cost to others (falling tables, higher future pumping costs). This is an open-access externality worsened by an input subsidy, not irrationality; the utility typically loses money on farm power.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
Which data source is the standard international database for agricultural production, trade and land use by country?
D. FAOSTAT
FAOSTAT, maintained by FAO, covers production, trade, land use, inputs and food balances for nearly all countries. The IMF's WEO covers macroeconomic projections; Trade Policy Reviews are country policy reports; the HDR covers human development indicators.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
In many low-income agricultural economies, measured open unemployment is low while poverty is high. The best explanation is that:
A. the poor cannot afford idleness, so they take low-productivity work
Without unemployment benefits, the poor work at whatever is available, often in low-productivity self-employment or casual farm work, so the problem shows up as underemployment and working poverty rather than open unemployment. Surveys include agricultural workers, and minimum wages rarely cover informal work.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
Consumption-based Gini coefficients, used in many Asian and African surveys, compared with income-based Gini coefficients for the same population are typically:
C. lower, because consumption is smoother and more equal than income
Households save in good years and dissave in bad ones, and the rich save a larger share, so consumption is more equally distributed than income. Comparing a consumption Gini with an income Gini overstates the difference in inequality between countries.
Further reading: Laisha manual: Economic Development and Agricultural Economies of the World; Todaro and Smith, Economic Development; OECD PSE Manual; WTO Agreement on Agriculture; FAO SOFI
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