Economic Development

Chapter 1

Directions: Multiple Choice: Encircle the letter that corresponds to the best answer.

1. Refers to the alternate combinations of maximum amount of two different goods of the economy’s
resources that are fully and efficiently utilized.
A. Production Function. C. Inflation.
B. Employment. D. None of the above. (Production Possibilities)

2. In the law of demand, quantity demanded decreases as the price increases, ceteris paribus. Therefore, price
and quantity demanded are positively related.
A. The first and the second statements are both true.
B. The first statement is true. The second statement is false.
C. The first and the second statements are both false.
D. The first statement is false. The second statement is true.

3. A situation in which resources are not fully utilized in production.

A. Economic instability. C. Opportunity cost.
B. Unemployment. D. Economic growth.
.
4. In explaining the concept of production possibilities, one of the assumptions is that quantity and quality of
resources remain constant. This means that:
A. No workers are unemployed.
B. No factory is idle.
C. Resources are fully used.
D. Workers don’t undergo new training programs to make them productive, and there are no new
natural resources that are discovered.

5. Country A produces rice instead of corn because Country A has a comparative advantage in producing rice
over Country B. This situation exemplifies :
A. Economic growth. C. Opportunity cost.
B. Diminishing return. D. Constant return.

6. In explaining the concept of production possibilities, one of the assumptions is that there is full use of
resources, knowledge and technology. This assumption reflects the true situation of a country.
A. The first and the second statements are both true.
B. The first statement is true. The second statement is false.
C. The first and the second statements are both false.
D. The first statement is false. The second statement is true.

7. When consumers predict that the supply of a basic commodity will run out:
A. There will be an outward shift in the demand curve and a decrease in equilibrium price.
B. There will be an inward shift in the demand curve and a decrease in the equilibrium price.
C. There will be an outward shift in the demand curve and an increase in the equilibrium price..
D. There will be an outward shift in the demand curve without any impact on the equilibrium price.
8. An outward shift in the production possibilities curve indicate:
A. Increase demand. C. Economic growth.
B. Decreased demand. D. Underemployment.

9. When the demand for personal computer increases, the demand for software proportionally increases. The
impact on price will be :
A. Price of the PC alone increases.
B. Price of both products increases.
C. Price of the software alone increases.
D. Price of the personal computer increases while the price of software remains constant.

10. The law of supply indicates that :

A. Price and supply are negatively related. C. Price and supply are positively related.
B. Price and supply are inversely related. D. The relationship of these variables are not clear.

11. When there is an improvement in technology, and assuming that the demand is constant,

A. There will be an increase in the equilibrium quantity of supply and price.

B. There will be an increase in supply, but a decrease in price.
C. There will be a decrease in supply and a decrease in price.
D. There will be an increase in supply without affecting the price.

12. Occurs when the price is lower than the market price level.
A. Shortage. C. Economic growth.
B. Surplus. D. Unemployment.

13. Occurs when the price level is higher than the market price level:
A. Shortage. C. Economic growth.
B. Surplus. D. Unemployment

14. Market failure occurs when:

A. Pursuit for profit results in decreased consumer satisfaction.
B. Cost and benefit of a private business activity is passed on to society.
C. Private business activity causes environmental degradation.
D. Only A & C happens.
E. All of the above.

15. Market power sets in from which of the following scenarios?

A. Industry is deregulated that encourages new industry player.
B. Consolidation of industry players giving rise to concentrated supply.
C. Pure industry competition.
D. All of the above.

16. High and low employment affect production possibilities. This situation also influences the average price
market levels.
A. The first and second statements are both true.
B. The first and second statements are both false.
C. The first statement is true. The second statement is false.
D. The first statement is false. The second statement is true.
17. Refers to the study of the total economy:
A. Microeconomics. C. Managerial economics.
B. Macroeconomics D. GDP.

18. Human Development Index (HDI) is composed of:

A. Level of educational attainment. C. Per capita income.
B. Life expectancy at birth. D. All of the above.

19. Standard GNP less estimate of environmental degradation:

A. Green GNP. C. Green revolution.
B. Market failure. D. Green GDP.

20. Method that considers cost index of comparable sets of goods in local currency and compares prices of the
same sets goods in other countries expressed in USDollars is known as:
A. Forex Exchange Rate. C. Consumer Price Index (CPI).
B. Purchasing Power Parity (PPP). D. Inflation Rate.

21. When the number of consumers for ice cream increases while supply remains constant, which of the
following occurs?
C. Outward shift of demand curve and a decrease in the price of ice cream.
D. Outward shift of the demand curve and an increase in the price of ice cream.
E. Inward shift of the demand curve and an increase in the price of ice cream.
F. Inward shift of the demand curve and a decrease in the price of ice cream.

22. When cost of production increases,

A. Supply curve tends to shift outward and price tends to decrease.
B. Supply curve tends to shift outward and the price tends to increase.
C. Supply curve tends to shift inward and the price tends to decrease.
D. Supply curve tends to shift inward and the price tends to increase.

23. Which of the following factors causes shift of the supply curve?
A. Changes in consumer tastes.
B. Changes in the prices of complements and substitutes.
C. Changes in consumers’ income.
D. Changes in the technology used to produce the product.

24. Market power sets in when:

A. The industry is deregulated which gives rise to the entry of new market players. .
B. There is pure competition.
C. The industry is consolidated and supply is concentrated.
D. Only B and C.

25. Which of the following factors causes shift of the supply curve?
A. Changes in consumer tastes.
B. Changes in the prices of complements and substitutes.
C. Changes in consumers’ income.
D. Changes in the technology used to produce the product.
 Economic Development
Chapter 2
Overview of Economic Development

Multiple Choice: Select the best answer by shading the corresponding letter.

1. Which of the following are features of economic development?

A. Literacy rate, infrastructure, access to good quality housing.
B. Internet access, academic level and quality healthcare.
C. Shift from agriculture to industry then Service.
D. All of the above.

2. The scope of economic development is broad and it includes which of the following?
A. GDP, GNP and per capita income.
B. GDP, GNP, and income distribution.
C. Improvement in Life expectancy rate, literacy rate, poverty rate, and economic growth.
D. All of the above.

3. It is possible to have economic growth without economic development. Therefore, there could be an
increase in GDP without any actual improvements in in living standard.
A. Both statements are true.
B. Both statements are false.
C. The first statement is true. The second statement is false.
D. The first statement is false. The second statement is true.

4. Which of the following statements characterize the high mass consumption stage of Economic
Development?
A. Transition triggered by external influence, interests, and market.
B. Installation of physical infrastructure.
C. Exploitation of comparative advantages in international trade.
D. Development of wider industrial and commercial bases.

5. Possible reasons why increase in GDP may not result to economic development:
A. The rich is getting richer, while the poor is getting poorer.
B. Corruption and bureaucracy in government and traffic congestion.
C. A wide gap between the rich and the poor exists.
D. Low level of literacy rate.

6. What are the new measures of economic development?

A. Green GNP, healthy life expectancy, and human development index (HDI).
B. Consumer Price Index (CPI) and interest rates.
C. Unemployment rate, and foreign exchange rate.
D. GNP and GDP.

7. Created to emphasize that people and their capabilities should be the ultimate criteria for assessing country
development, not economic growth alone.
A. Healthy life expectancy.
B. Human Development Index (HDI).
C. Green GNP.
D. Green GDP.
8. Refers to the expected number of years to be lived by an individual in “full health”.
A. Mortality rate.
B. Population growth rate.
C. Life expectancy.
D. Morbidity rate.

9. Refers to the “informal name” of National income measures adjusted to consider depletion of natural
resources and environmental degradation.
A. Environmental Pollution.
B. Green System of National Accounting or Green GNP.
C. Green System of National Accounting or Green GDP.
D. Greenhouse Effect.

10. What are the methods for comparing income between countries?
A. Purchasing power parity (PPP) and Unemployment rate.
B. Exchange rate and interest rate.
C. GNP and GDP.
D. Exchange rate method and Purchasing Power Parity (PPP).

11. The purchasing parity method is exemplified by:

A. Cost index for comparable baskets of consumption goods in the local currency and then
compares it with prices in the United States for the same sets of goods.
B. Comparison of income levels against the prices of commodities among countries.
C. Cost index for comparable baskets of consumption goods in the local currency versus the currency of
another country.
D. All of the above.

12. Provides unique insights into the benefits arising from education, from earning potential to the economic
growth and well-being of societies at large.
A. Unemployment rate.
B. Purchasing Power.
C. Literacy rate.
D. Educational attainment.

13. Equivalent years of healthy life is determined by which of the following?

A. Years of full health minus the overall life expectancy rate.
B. Weighted years of ill-health minus the overall life expectancy rate.
C. Overall life expectancy rate plus weighted years of ill-health.
D. Overall life expectancy rate plus weighted years of full-health.

14. Which of the following characterizes the traditional society stage of economic development?
A. Transition triggered by external influence, interests, and markets.
B. Installation of physical infrastructure.
C. Investment in manufacturing.
D. Exploitation of absolute advantage in international business.

15. Which of the following best describes economic development?

A. Increase in GDP, stable rates of inflation, foreign exchange, and unemployment.
B. Increase in GNP and per capita income, stable rates of inflation, foreign exchange, and unemployment.
C. Increase in the level of production in an economy along with the advancement in technology and
improvement in the standard of living.
 1. The type of technical progress achieved by combining together the factors of production:
C. Dynamic Efficiency. C. Static Efficiency.
D. Disembodied Technical Progress D. Embodied Technical Progress.

18. Type of technical progress that changes the nature of inputs:

B. Dynamic Efficiency. C. Static Efficiency.
B. Disembodied Technical Progress. D. Embodied Technical Progress.

19. The growth in output unaccounted by the growth of labor and capital:
C. Residual Growth. C. Economic Growth.
D. Growth in input. D. Technical Efficiency.

26. The convergence point between investment and depreciation is known as:
C. Absolute Convergence. C. Steady State of Equilibrium.
D. Conditional Convergence. D. Break-even point.

Growth and Asian Experience

Economic Development
Chapter 3

Multiple Choice: Select the best answer by shading the corresponding letter.

7. Forces reflecting skills upgrade of workforce acquired through training and development.
C. Disembodied Technical Progress. C. Total Factor Productivity.
D. Embodied Technical Progress. D. Multifactor Activity

8. Equation to calculate the steady state of equilibrium for capital-labor ratio of K.

E. Y = 𝐾 1/2 C. SY = dK
F. i = SY. D. SY = (1-S)

9. Equation for finding the steady state of equilibrium for investment.

G. i = C + 1. C. g(Y) = g(k) + g(L).
H. i = SY. D. i = (Y-1) C
.
10. Equation for finding the steady state of equilibrium for C:
E. C = (S-1). C. C = (1-S)Y
F. C= (Y-S). D. C = (S-Y)1

11. What is the equation for calculating closed economy?

C. Y = C + i C. Y = g(K) + A.
D. Y = g(L) + g(K0 + A. D. Y = SY + dK.

12. In Keynesian/Harrod-Domar growth model, equation for calculating GDP growth is:.
𝑪𝑶𝑹 𝑺𝒂𝒗𝒊𝒏𝒈𝒔 𝑹𝒂𝒕𝒊𝒐
E. C.
𝑺𝒂𝒗𝒊𝒏𝒈𝒔 𝑹𝒂𝒕𝒊𝒐 𝑪𝑶𝑹
 𝐾 𝑌
F. . D.
𝑌 𝐾

7. To determine Capital Output Ratio (COR), which of the following formulae is applied?
𝑲 𝑺𝒂𝒗𝒊𝒏𝒈𝒔 𝑹𝒂𝒕𝒊𝒐
A. . C.
𝒀 𝑪𝑶𝑹
𝑌
B. . D. Y = f(K,L,A)
𝐾

8. Macroeconomic policy pertaining to government spending and revenue collection:

C. Monetary Policy. C. Contractionary Monetary Policy.
D. Fiscal Policy. D. Expansionary Fiscal Policy.

9. Refers to the policy of managing liquidity of the economy :

E. Monetary Policy. C. Expansionary Monetary Policy.
F. Fiscal Policy. D. Contractionary Monetary Policy

10. Contractionary Monetary Policy reduces inflation via :

C. Decreasing interest rate and buying of securities.
D. Increasing interest rate and selling of securities.
E. Decreasing interest rate and selling of securities
F. All of the above.

12. When stiff restrictions on hiring, compensation, work hours and related rules are enforced, the labor-market
is said to be:
E. Highly flexible. C. Moderately flexible
F. Less flexible. D. Inflexible

12. The importance of sector policies was given emphasis which was among the contributory factors for the
Asian Growth Miracle. Among them was agricultural sector policy implemented by:
C. Reducing tax collection. C. Increasing physical capital investment.
D. Green revolution D. Increasing capital output.

14. Refers to the ouward-looking policy of Asian countries attributable to their bullish economic development:
C. Foreign Direct Investment (FDI). C. Focus on domestic/local production.
D. Import Substitution. D. All of the above.

14. The growth theory that considers the law of diminishing return in the growth equation:
F. Lewis-Fei-Ranis Model. C. Harrod-Domar Model.
G. Structuralist Model. D. Solow (Neoclassical) Model.

15. The growth theory that supports an equitable price of raw materials from poor countries in the South as
against the price of finished goods manufactured from rich countries in the North.
E. Lewis-Fei-Ranis Model. C. Harrod-Domar Model.
F. Structuralist Model. D. Power-Balance Model.

16. The movement of the economy toward the production possibilities frontier refers to:
E. Dynamic Efficiency. C. Dynamic Productivity.
F. Economic Flexibility. D. Static Efficiency

17. The type of technical progress achieved by combining together the factors of production:
E. Dynamic Efficiency. C. Static Efficiency.
 F. Disembodied Technical Progress D. Embodied Technical Progress.

18. Type of technical progress that changes the nature of inputs:

C. Dynamic Efficiency. C. Static Efficiency.
B. Disembodied Technical Progress. D. Embodied Technical Progress.

19. The growth in output unaccounted by the growth of labor and capital:
E. Residual Growth. C. Economic Growth.
F. Growth in input. D. Technical Efficiency.

27. The convergence point between investment and depreciation is known as:
E. Absolute Convergence. C. Steady State of Equilibrium.
F. Conditional Convergence. D. Break-even point.

28. Which of the following is not a part of the closed economy equation?
A. Investment. C. Net export.
B. Consumer spending. D. National income.

29. The steady state of equilibrium is:

A. The intercept of I and Y.

B. The point where there is no difference between investment and depreciation.
C. The point where I =K.
D. The point where Y = 0.

24. What is the steady state of equilibrium for capital-labor-ratio (K) if the national savings rate is 0.14 and the
depreciation rate is 0.04?
A. 12.40
B. 12.25
C. 3.50
D. 3.25.

25. Given the data in #24, what is the steady state of equilibrium for output (Y)?
A. 3.50
B. 3.00
C. 12.25
D. 12.70

26. What then is the steady state of equilibrium for consumption (c)?
A. 3.50
B. 6.25
C. 2.50
D. 3.01

27. What is the steady state of equilibrium for investment (i) given the above data?
A. 2.50
B. 7.03
 C. 0.49
D. 3.25

28. The closed economy equation is therefore:

A. 3.59 = 3.01 + 0.49
B. 2.50 = 2.00 + 0.50
C. 6.25 = 3.25 + 3.00
D. 3.25 = 3.20 + 3.05

29. If labor input increases by 2 per cent and capital stock increases by 3 per cent per annum, what will be the GDP
growth rate? Assume the multi- factor activity or efficiency factor is 2, labor share in national income is 70%,
and capital share is 30%:
A. 2.023
B. 4.20
C. 5.023
D. 5.30

30. What economic growth model includes the portion of economic growth that cannot be explained by the
traditional measures of inputs of land, labor and capital?
A. Total Factor Productivity. C. Solow Growth Model.
B. Harrod-Domar Growth Model D. New Growth Model.

31. Best describes the Solow Growth Model:

A. As the national expenditure increases, national income increases.
B. Incorporates the law of diminishing returns.
C. As the national income increases, investment decreases.
D. The steady state of equilibrium is achieved at the intercept of capital and investment.

32. Structuralist approach to economic development demonstrates which of the following?

A. The process of industrialization that takes place and how inefficiencies can arise.
B. Inter-company, inter-industry, and inter-country transfer of technology.
C. Investment in physical and human captal.
D. Process of shifts in resources, and a shift from agricultural to industrial and service sector.

33. The issue on the rich countries exploiting the poor countries in terms of prices of raw materials and finished
goods gave rise to:
A. Structuralist approach to economic growth.
B. Power Balance theory.
C. Lewis-Fei-Ranis model.
D. Keynesian Growth theory.

34. The Lewis-Fei-Ranis Model states that there is low accumulation of capital and, low productivity and low
earnings in the rural areas. For this reason, people from the rural areas move to urban areas (cities) to take
advantage of higher earnings offered by the urban areas.
A. The first and second statements are true.
B. The first and the second statements are false.
C. The first statement is true. The second statement is false.
D. The first statement is false. The second statement is true.

35. One of the principal factors contributory to the Asian Growth Miracle is Labor Market Flexibility. A
Flexible labor market exists under the following condition:
A. Labor markets are subject to strict regulations.
 B. There are fewer rules and regulations in terms wages, hiring policies, and work hours.
C. Strict enforcement of rules governing labor union.
D. All of the above.

Economic Development
Chapter 4: Asian Crisis and Recent Development

Multiple Choice: Encircle the letter corresponding to the best answer.

1. It is the term referring to the surge in the financial market caused by speculation regarding a commodity
which results in an explosion of activity in a market segment resulting in vastly over-inflated prices.
A. Fund hedging. C. Currency devaluation.
B. Economic overheating. D. None of the above (Bubble Economy).

2. The bubble development was the period when the stock market, real estate and bank credit bubble
developed in the first half of the 90’s. The export sector played a complementary role in the bull market
bubble that developed in Southeast Asia.
G. The first and second statements are true.
H. The first and second statements are false.
I. The first statement is true. The second statement is false. (Financial Sector)
J. The first statement is false. The second statement is true.

3. During the Asian financial crisis, the Thai baht first began to decline in June, 1997, and was followed by the
currency devaluation in Malaysia, Indonesia, and Philippines. The devaluation subsequently spread to the
Australian dollar and Korean Won in the month of October, 1997:
A. The first and second statements are true.
B. The first and second statements are false.
C. The first statement is true. The second statement is false.
D. The first statement is false. The second statement is true.

4. It is a factor in the financial crisis that contributed to the severity of Asian crisis in 1995 whereby foreign
banks and financial institutions were denied to enter the Asian countries:
A. Inadequate fund management system.
B. Nonperforming loans.
C. Ineffective sterilization of capital inflows.
D. None of the above. (Restrictions on foreign banks’ entry)

5. A situation in the economy where a shock in a particular economy or region spreads out and affects the
other economies by way of price movements.
A. Financial integration.
B. Globalization.
C. Contagion effect.
D. Bubble economy effect.

6. There were several reform measures prescribed by the international banks and aid agencies after the Asian
Financial crisis. Some of these reform agenda included debt restructuring and restrictions on foreign
banks’ entry.
A. The first and second statements are true.
 B. The first and the second statements are false.
C. The first statement is true. The second statement is false.
D. The first statement is false. The second statement is true.

7. One of the factors in bubble economy was the ineffective sterilization of capital inflows. Which of the
following best describes sterilization of capital inflows?
A. It sanitizes ill-gotten wealth.
B. It chokes off some excess demand caused by capital influx.
C. Restricts entry of the foreign banks and financial institutions.
D. All of the above.
E. Only B and C.

8. Another factor contributory to the overheating of the economy in 1995-1996 was the nonperforming loans.
A Nonperforming loan is a function of which of the following:
A. Approval of risky projects.
B. Uncollateralized loans.
C. Unhedged offshore dollar borrowing.
D. All of the above.
E. Only A and B.

9. Another factor contributory to the Asian financial crisis in 1995 was the inefficient handling and
disbursement of foreign funds inflows by countries. This factor refers to:
A. Ineffective sterilization of capital inflows.
B. Inadequate fund management system.
C. Restriction of foreign financial institutions and high costs of financial services
D. All of the above.
E. None of the above.

10. The high costs of financial services which is among the factors that led to the Asian financial crisis in 1995.
This rise in costs of financial services was due to:
A. Higher interest margins and lending rates to borrowers.
B. Devaluation and stock market collapse leading to severe balance sheet problems.
C. Window-dressing of the financial statements.
D. All of the above.
E. Only A and B.

11. Among the causes of the Asian financial crisis in 1995 were external factor difficulties such as:
A. Overvalued exchange rates.
B. Collapse in exports,
C. Rapid growth in current-account deficits.
D. All of the above.
E. Only B and C.

12. The post financial crisis saw substantial improvement both in global and Asian economy. Between 2002
and 2007, acceleration in the economy of Asian region set in led by India and China where:
A. Standards of living rose.
B. Poverty dropped.
C. Domestic and foreign trade improved
D. All of the above.
E. Only A and C.
13. The Asian financial crisis resulted in the division of the Asian economies to Southeast and East Asia. The
The East Asia is composed of which of the following countries?
A. China, Taiwan, Korea, and Hongkong.
B. Philippines, Malaysia, Singapore and India.
C. Philippines, Malaysia, Singapore and Thailand.
D. Indonesia, Malaysia, Philippines, and Singapore.

14. The development divide resulted to the emergence of the Asian-5 composed of which countries?
A. Indonesia, Malaysia, Philippines, Singapore and Thailand.
B. Indonesia, Malaysia, Philippines, Singapore and Hongkong.
C. China, Malaysia, Philippines, Singapore and Indonesia.
D. Korea, Malaysia, Philipppines, Singapore and Indonesia.

15. In order to facilitate future economic development after the financial crisis, the international banks and aid
agencies have recommended reform agenda. Which of the following are among the reform agenda as
suggested by the international banks and aid agencies?
A. Bilateral economic agreement among countries, and unilateral trade agreement.
B. Greater competition, information and transparency.
C. Financial markets reform and capital account reform.
D. B and C.
E. All of the above.

16. The information and transparency reform requires:

A. Standardization of accounting and financial reporting.
B. Financial market regulation.
C. Industry deregulation to encourage competition.
D. Extension of private sector credit lines.

17. After the financial crisis, the global economy recovered particularly between 2002 and 2007. Exchanged
rates gained strength. Strengthening exchange rate means the weakening of the local currency against US
Dollars.
A. The first and second statements are both true.
B. The first and second statements are both false.
C. The first statement is true. The second statement is false. (local currency is stronger than US
Dollars).
D. The first statement is false. The second statement is true.

18. During the global economic recovery, equity prices also increased. Increase in equity prices means an
increase in stock prices, thus an increase in the stock market indices.
A. The first and the second statements are both true.
B. The first and the second statements are both false.
C. The first statement is true. The second statement is false.
D. The first statement is false. The second statement is true.

19. Recovery of the global economy after the crisis also came through:
A. Revival of domestic demand supported by exports.
B. Restoration of investor confidence, softer budget deficits and lower interest rates.
C. Changes in the monetary and fiscal policies of countries.
D. Only A and B.
E. Only A and C.
 20. According to Economic and Social Commission for Asia and the Pacific (ECAP), unemployment rate of
Thailand rose from 1.9% in 1997 to 4.4% in 1998. Similarly, there was an in increase in unemployment
rate in Indonesia, Korea, and Malaysia. In particular, the increase in unemployment rate in Indonesia
during this period was:
A. 2.7% in 1997 to 6.4% in 1998.
B. 2.6% in 1997 to 7.7% in 1998.
C. 4.7% in 1997 to 21.3% in 1998.
D. 5.3% in 1997 to 12.4% in 1998

Economic Development
Chapter 5: Agriculture

Multiple Choice: Encircle the letter that corresponds to the best answer.

13. Agriculture provides capital for economic growth and the source of the capital is:
A. Foreign Investment. C. Earnings from stocks.
B. Surplus from farmer’s income. D. Microfinancing.

14. Which of the following exemplifies foreign exchange from agriculture:

A. Urban population buys agricultural products from rural folks.
B. Importation of capital equipment.
C. USD$=Php50
D. Foreign Direct Investment

15. Agricultural transformation follows which of the following growth models?

A. Keynesian C. Structuralist
B. Solow D. Power balance
.
16. Farmers resist agricultural innovation due to
A. Poor implementation of Comprehensive Agrarian Reform Program (CARP)
B. Uncertainties that may be caused by innovation.
C. Land tenureship.
D. Poor landlord-tenant relationship

17. A product of research and development which resulted to a higher-yielding variety of rice :
A. Crop rotation.
B. Green revolution, use of fertilizer and modern irrigation system
C. Integration of animals in farming.
D. Availability of credit facility to farmers.

18. Among the factors for slow productivity of agriculture:

A. Non-availability of complementary inputs
B. Usurious interest rates on loans for farmers
C. Famers did not receive fair share of the gains
D. All of the above.
7. Efficiency of traditional agriculture is achieved through which of the following?
A. Refined method of cultivation.
B. Land size.
C. Better relationship between the landlord and tenant.
D. None of the above.

8. Agriculture is also a good source of input capital to achieve modern economic growth. This Input capital
comes in the form of:
A. Labor
B. Savings from invested income.
C. Output from urban sector.
D. Only A and B.
E. Only B and C.

9. Which of the following is the growth of agriculture and GDP of the Asian economies in the 1970s according
to World Bank, World Development Report of 1982?
A. Agriculture: 3%; GDP: 5%.
B. Agriculture: 5%; GDP: 3%.
C. Agriculture: 2%; GDP: 8%.
D. Agriculture: 8%; GDP: 2%.

10. Which of the following Asian countries demonstrated agricultural growth of 1-3%, and GDP growth of 3-
5% in the 70’s according to World Bank, World Development Report of 1982?
A. China, Korea, Philippines and Thailand.
B. Bangladesh, India, Pakistan, and Sri Lanka.
C. Singapore, Malaysia, Philippines, and Japan.
D. Bangladesh, China, Philippines, and Pakistan.

11. Changes in land tenure did not really help in the improvement of agricultural productivity according to the
microeconomics of Asian agriculture. The reason for this is that:
A. Farm sizes are small.
B. Disincentives of farmers.
C. Poor land distribution.
D. Countries focused on industrial development.

12. Which of the following are the major forms of land tenure and land use in agriculture?
A. Family-operated farms and tenancy agreement
B. Tenancy agreement, and land distribution based on agrarian reform program of the government.
C. Family-operated farms and land distribution based on agrarian reform program of the government.
D. None of the above.

13. Tenancy agreement may be in the form of:

A. Tenant gives a proportion of the output to the land landlords.
B. Land is rented to the tenant for a fixed rate.
C. Land redistribution scheme.
D. Only A and B.

14. Which of the following is/are true of the macroeconoc aspects of agricultural development?
A. Agriculture is labor extensive.
B. Agriculture is labor intensive.
C. Presence of extensive capital-intensive technologies as labor moves from rural to urban areas.
 D. All of the above.
E. Only B and C.

15. As regards the modernization of agriculture, some policy measures can be considered by the government.
Genetic engineering is among them. Genetic engineering refers to:
A. The use of synthetic or processed fertilizers.
B. Modification of the characteristics of plants to make it resistant to insects and herbs.
C. The use of conventional fertilizers.
D. All of the above.
E. Only B and C.

True or False: Write T if the statement is true, and F if is false

16 . Surplus from increased profitability of agriculture fuelled the beginning of industrialization in Asia. (T)

17. One of the effects of Lewis Fei Ranis model is the flow of labor to industrial sector which could benefit the
society as a whole. (T)

18. Agriculture plays a key role in economic development. However, the relative importance of agriculture
diminishes with growth overtime based on experience of a broad range of countries. (T)

19. According to Lewis (1954), industrial revolution and agrarian revolution go together. (T)

20. The reason why industrial revolution and agrarian revolution are inseperable is because, agricultural
transformation and productivity gains are needed for a sustainable surplus to be utilized for investment in
the industrial sector. (T)

21. Sectoral distribution of GDP employment as percentage of labor force in Taiwan indicates a transformation
from industry to agriculture, and services to industry. (F-transformation from agriculture to industry to
service)

22. According to Timmer (1991), the early phases of industrial development are characterized by a wide
productivity gap between agriculture and the rest of the economy. This is attributable to the differences in
the production function and technological change. (T)

23. Another reason given by Timmer (1991) in the productivity gap between agriculture and the rest of the
economy is the low movement of resources caused by disequilibrium of surplus labor in agriculture and
low productivity activities including handicrafts and services. (T)

24. In the microeconomics of agriculture in Asia, the factors contributory to increased agricultural productivity
were the use of fertilizers, pesticides and herbicides, irrigation, double-cropping improved varieties of crops,
and farm size. (F- farm size is not included. Farm size was not of help).

25. Zero tillage as a means of agricultural modernization means minimizing or eliminating the tilling of land
and retains crop residues as ground cover. (T)