0

The Role of Investment in Economic Development

Description: This quiz is designed to test your understanding of the role of investment in economic development. It covers topics such as the types of investment, the sources of investment, and the impact of investment on economic growth.
Number of Questions: 15
Created by:
Tags: economics development economics investment
Attempted 0/15 Correct 0 Score 0

Which of the following is NOT a type of investment?

  1. Physical capital

  2. Human capital

  3. Natural capital

  4. Financial capital


Correct Option: C
Explanation:

Natural capital is not a type of investment, but rather a stock of natural resources that can be used to produce goods and services.

Which of the following is the primary source of investment in developing countries?

  1. Foreign direct investment

  2. Domestic savings

  3. Government borrowing

  4. International aid


Correct Option: B
Explanation:

Domestic savings are the primary source of investment in developing countries, as they are less reliant on foreign capital and international aid.

Which of the following is NOT a positive impact of investment on economic growth?

  1. Increased productivity

  2. Increased employment

  3. Increased inequality

  4. Improved infrastructure


Correct Option: C
Explanation:

Increased inequality is not a positive impact of investment on economic growth, as it can lead to social unrest and political instability.

The Harrod-Domar model suggests that economic growth is primarily determined by:

  1. The rate of investment

  2. The rate of population growth

  3. The rate of technological progress

  4. All of the above


Correct Option: D
Explanation:

The Harrod-Domar model suggests that economic growth is primarily determined by the rate of investment, the rate of population growth, and the rate of technological progress.

Which of the following is NOT a challenge to investment in developing countries?

  1. Political instability

  2. Lack of infrastructure

  3. High levels of corruption

  4. Abundant natural resources


Correct Option: D
Explanation:

Abundant natural resources are not a challenge to investment in developing countries, as they can be used to attract foreign investment and generate revenue.

Which of the following is an example of physical capital?

  1. A factory

  2. A computer

  3. A stock of gold

  4. A patent


Correct Option: A
Explanation:

A factory is an example of physical capital, as it is a tangible asset that can be used to produce goods and services.

Which of the following is an example of human capital?

  1. A skilled worker

  2. A doctor

  3. An engineer

  4. All of the above


Correct Option: D
Explanation:

All of the above are examples of human capital, as they represent the skills and knowledge that workers possess.

Which of the following is an example of financial capital?

  1. A loan

  2. A stock

  3. A bond

  4. All of the above


Correct Option: D
Explanation:

All of the above are examples of financial capital, as they represent claims on future income.

Which of the following is NOT a type of foreign direct investment?

  1. Greenfield investment

  2. Brownfield investment

  3. Portfolio investment

  4. Mergers and acquisitions


Correct Option: C
Explanation:

Portfolio investment is not a type of foreign direct investment, as it does not involve the establishment of a new business or the acquisition of an existing business.

Which of the following is NOT a benefit of foreign direct investment for developing countries?

  1. Increased employment

  2. Technology transfer

  3. Increased exports

  4. Increased inequality


Correct Option: D
Explanation:

Increased inequality is not a benefit of foreign direct investment for developing countries, as it can lead to social unrest and political instability.

Which of the following is a challenge to foreign direct investment in developing countries?

  1. Political instability

  2. Lack of infrastructure

  3. High levels of corruption

  4. All of the above


Correct Option: D
Explanation:

All of the above are challenges to foreign direct investment in developing countries, as they can make it difficult for foreign investors to operate profitably.

Which of the following is a policy that governments can use to promote investment?

  1. Providing tax incentives

  2. Improving infrastructure

  3. Reducing corruption

  4. All of the above


Correct Option: D
Explanation:

All of the above are policies that governments can use to promote investment, as they can make it more attractive for businesses to invest in their countries.

Which of the following is a measure of the return on investment?

  1. Internal rate of return

  2. Net present value

  3. Payback period

  4. All of the above


Correct Option: D
Explanation:

All of the above are measures of the return on investment, as they provide information about the profitability of an investment.

Which of the following is NOT a risk associated with investment?

  1. Political risk

  2. Economic risk

  3. Financial risk

  4. No risk


Correct Option: D
Explanation:

There is no such thing as an investment with no risk. All investments carry some degree of risk, whether it is political risk, economic risk, or financial risk.

Which of the following is a strategy that investors can use to reduce risk?

  1. Diversification

  2. Hedging

  3. Asset allocation

  4. All of the above


Correct Option: D
Explanation:

All of the above are strategies that investors can use to reduce risk, as they help to spread out the risk of an investment across different assets or markets.

- Hide questions