ECONOMIC DEVELOPMENT TUT 1 2019

Tutorial 1
MCQ

1. Development economics is the study of the

a. alleviation of absolute poverty.
b. transformation of institutions.
c. allocation of resources in developing countries.
d. all of the above.

2. Which of the following is not an important objective of development?

a. increases in per capita income
b. the expansion of available choices
c. increases in individual and national self-esteem
d. all of the above are important objectives of development

3. A good definition of the meaning of development is the

a. elimination of absolute poverty.
b. improvement in the quality of life.
c. fulfillment of the potential of individuals.
d. all of the above.

4. Countries tend to be classified as more or less developed based on

a. the literacy rate. b. the poverty rate.
c. the level of income per capita. d. the types of goods they produce.

5. Which of the following demonstrates international interdependence?

a. the oil shocks b. the debt crisis
c. global warming d. all of the above

6. The core values of development include

a. increasing income per person.
b. reducing the inequality of income.
c. the ability to meet basic needs.
d. all of the above.

7. The Millennium Development Goals include

a. eliminating the proportion of people living on less than $1 per day.
b. universal primary education.
c. increasing exports by one half.
d. all of the above.

BY / DR. WALEED ALY 1

 ECONOMIC DEVELOPMENT TUT 1 2019

Mathematical section
Assume there are four families in a country. The average per capita income of these families is LE 5000.
If the income of three families is LE 4000, LE 7000 and LE 3000 respectively, what is the income of
fourth family?
Answer:
(4000 + 7000 + 3000 + x) /4=5000
14000 + x = 20000
X = 6000

Short Essay:
1. Why is studying economics so central to understanding the problems of developing countries?
Answer: Economics is the science of choice in allocating scarce resources to unlimited wants. Economics
is central to understanding developing countries, since these countries have extensive needs with very
scarce resources, necessitating difficult choices. As economics improves the making of choices in LDCs,
their problems will be less severe. Economic analysis focuses on ways to improve the material well-being
of the population, and the past experience of economies trying to improve economic performance.

2. “Suppose records show that the average income in country has been increasing over a period of
time. From this, can we conclude that all sections of the economy have become better” discuss this
statement and give examples.
Answer: the average income of a country is a way to determine the development of a country but it does
not guarantee the progress of the economy. Few examples have been seen in which clearly it was shown
that there are many other factors which are important for the overall development of a particular society.
Some factors are infant mortality rate and literacy rate etc.

3. According the World Bank’s World Development Indicators 2003, Canada’s 2001 GNI per capita
($21,930) was about 63 times higher than Kenya (with $350). Can we assume that the average
economic well-being in Canada was about 63 times the average economic well-being in Kenya?
What other assessments of socioeconomic welfare (other than GNP per capita) could be used in
comparing the two?
Answer: No, it is not likely that well-being is 63 times greater in Canada than Kenya.
 First, since Canada is located in a temperate climate some of Canada's GNI is for items like
heating, insulation, and warmer clothing that merely offset the disadvantages of cold weather and
add to GNI without increasing satisfaction.
 Secondly, GNI for Kenya is probably understated since a greater proportion of goods are
produced in the home for own consumption and never enter the market and is thus likely left out
of GNP measurements. Third, GNI is understated for Kenya, where household size is
substantially larger than in Canada.
 Fourth, GNI is overstated for Canada, because a number of items included in its national income
are intermediate goods, reflecting the costs of producing and guarding income.
 Fifth, the exchange rate used to convert GNI in Kenyan shillings into Canadian dollars, if market
clearing, is based on the relative prices of internationally traded goods (and not on purchasing
power). On balance, the per-capita income differences between Canada and Kenya are vastly
overstated .

BY / DR. WALEED ALY 2

 ECONOMIC DEVELOPMENT TUT 1 2019

4. Are economic welfare and political freedom complementary or competing goals? You may build
your argument on Sen’s capability approach.
Answer: They tend to be complementary. Democratic rights and liberties are correlated with economic
and food security. For Sen, development implies freedom, overcoming unfreedoms such as hunger,
famine, ignorance, an unsustainable economic life, unemployment, barriers to economic fulfillment by
women or minority communities, premature death, violation of political freedom and basic liberty, threats
to the environment, and little access to health, sanitation, or clean water.

BY / DR. WALEED ALY 3