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Theories of Economic Growth and Development

Description: This quiz covers the various theories of economic growth and development, exploring the factors that influence the economic progress of countries and regions.
Number of Questions: 15
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Tags: economic growth development theories economic geography
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Which theory emphasizes the importance of technological progress and innovation as the primary drivers of economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Endogenous Growth Theory

  4. Dependency Theory


Correct Option: C
Explanation:

Endogenous Growth Theory posits that technological progress and innovation are internal to the economic system and can be influenced by factors such as research and development, education, and institutional frameworks.

According to the Harrod-Domar model, what is the relationship between investment and economic growth?

  1. Investment has no impact on economic growth.

  2. Investment is positively correlated with economic growth.

  3. Investment is negatively correlated with economic growth.

  4. The relationship between investment and economic growth is non-linear.


Correct Option: B
Explanation:

The Harrod-Domar model suggests that investment in physical capital is a key determinant of economic growth, with a higher investment rate leading to faster economic growth.

Which theory argues that economic growth is driven by the accumulation of human capital, such as education and skills?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Human Capital Theory

  4. Dependency Theory


Correct Option: C
Explanation:

Human Capital Theory posits that investments in education and skills enhance the productivity of labor, leading to higher output and economic growth.

The Solow-Swan model assumes that technological progress is:

  1. Exogenous and independent of economic factors.

  2. Endogenous and driven by economic incentives.

  3. Non-existent and has no impact on economic growth.

  4. Random and unpredictable.


Correct Option: A
Explanation:

The Solow-Swan model assumes that technological progress is exogenous, meaning it is not influenced by economic variables within the model.

Which theory emphasizes the role of institutions and governance in promoting economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Institutional Economics

  4. Dependency Theory


Correct Option: C
Explanation:

Institutional Economics argues that institutions, such as property rights, legal frameworks, and governance structures, play a crucial role in shaping economic incentives and determining the efficiency of resource allocation.

According to the Dependency Theory, what is the primary obstacle to economic growth in developing countries?

  1. Lack of natural resources.

  2. Inadequate infrastructure.

  3. Exploitation by developed countries.

  4. Cultural barriers.


Correct Option: C
Explanation:

Dependency Theory argues that developing countries are trapped in a cycle of poverty and underdevelopment due to their exploitation by developed countries through mechanisms such as unequal trade, foreign investment, and debt.

The concept of the 'Kuznets curve' is associated with which theory of economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Endogenous Growth Theory

  4. Kuznets' Modernization Theory


Correct Option: D
Explanation:

Kuznets' Modernization Theory proposes that economic growth is accompanied by a transition from a predominantly agricultural economy to an industrialized economy, leading to a U-shaped pattern of income inequality.

Which theory emphasizes the importance of agglomeration economies and spatial clustering in driving economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. New Economic Geography

  4. Dependency Theory


Correct Option: C
Explanation:

New Economic Geography focuses on the role of agglomeration economies, such as knowledge spillovers, transportation costs, and market access, in shaping the spatial distribution of economic activity and driving regional growth.

The concept of 'balanced growth' is associated with which theory of economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Balanced Growth Theory

  4. Dependency Theory


Correct Option: C
Explanation:

Balanced Growth Theory posits that economic growth is most effective when all sectors of the economy expand at a similar rate, avoiding imbalances and distortions.

Which theory emphasizes the role of entrepreneurship and innovation in driving economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Schumpeterian Growth Theory

  4. Dependency Theory


Correct Option: C
Explanation:

Schumpeterian Growth Theory argues that economic growth is driven by entrepreneurs who introduce new products, processes, and business models, leading to technological change and market expansion.

The concept of 'economic dualism' is associated with which theory of economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Dualistic Development Theory

  4. Dependency Theory


Correct Option: C
Explanation:

Dualistic Development Theory proposes that developing economies consist of two distinct sectors: a modern, industrialized sector and a traditional, agricultural sector, with limited linkages between the two.

Which theory emphasizes the importance of foreign direct investment (FDI) in promoting economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Export-Led Growth Theory

  4. Dependency Theory


Correct Option: C
Explanation:

Export-Led Growth Theory argues that economic growth can be accelerated by promoting exports, which can lead to increased foreign exchange earnings, job creation, and technology transfer.

The concept of 'path dependence' is associated with which theory of economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Historical Institutionalism

  4. Dependency Theory


Correct Option: C
Explanation:

Historical Institutionalism emphasizes the role of historical events, institutions, and path dependence in shaping economic outcomes, arguing that past decisions and events can have long-lasting effects on economic development.

Which theory emphasizes the importance of social capital and networks in driving economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Social Capital Theory

  4. Dependency Theory


Correct Option: C
Explanation:

Social Capital Theory posits that social networks, trust, and cooperation can facilitate economic transactions, reduce transaction costs, and enhance economic efficiency, leading to economic growth.

The concept of 'green growth' is associated with which theory of economic growth?

  1. Classical Growth Theory

  2. Neoclassical Growth Theory

  3. Sustainable Development Theory

  4. Dependency Theory


Correct Option: C
Explanation:

Sustainable Development Theory emphasizes the need for economic growth to be environmentally sustainable, promoting policies that decouple economic growth from environmental degradation and resource depletion.

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