Question

1. In reality, overall growth and income for the poorest are:

a. highly positively correlated, but not perfectly.

b. uncorrelated.

c. highly negatively correlated, but not perfectly.

d. slightly positively correlated.

2. Economists like Hernando de Soto feel that a ___________ is the key to economic development.

a. strong national defense

b. strong currency

c. strong titling system

d. stable currency

3. Peruvian economist Hernando de Soto claims the ___________ in Latin America results in "dead capital."

a. weak titling system

b. strong titling system

c. general lack of strong national defense

d. generally weak currencies

4. Governments choose to pursue industrial policy to:

a. raise tax revenue.

b. spur economic growth.

c. create publicly owned companies.

d. regulate the growth of certain industries.

5. Industrial policy is an effort by a government to:

a. regulate prices in particular industries.

b. identify the most profitable industries in the world, and adopt them in their country.

c. favor some industries over others.

d. control markets that are industrial.

Answer 1

Answer: A

EXPLAINATION: In reality, overall growth and income for the poorest are highly positively correlated, but not perfectly.As with economic growth, demand for labour increases hence the poor strata get jobs by which their income level increases. Hence with increase in income, demand in economy generates which further give rise to economic growth and this POSITIVE CYCLE get started though rich(businesses etc) get more income increase than poors, hence this positive correlation is not that perfect.

Answer 2:C

EXPLAINATION: Economists like Hernando de Soto feel that a STRONG TITLING SYSTEM is the key to economic development.As with giving recognition to property rights to poors i.e formalising their property and titling rights dead capital were legalized and it would elevate the poor out of poverty and protect rights of ownership and ease the way for free market transactions.

Answer 3:A

EXPLAINATION:Peruvian economist Hernando de Soto claims the WEAK TITLING RIGHTS or SYSTEM in Latin America results in "dead capital." As with out formal recognition to property rights,they(poors) can not utilize this for their use i.e. it is undercapitalized and can not achieve its full potential.

Answer 4:B

EXPLAINATION:Governments choose to pursue industrial policy to spur economic growth. It encourages economic development and establish forward as well as backward linkage in the economy.

Answer 5:B

EXPLAINATION:Industrial policy is an effort by a government toidentify the most profitable industries in the world, and adopt them in their country.Which on the other hand boosts the economic development and growth of the country.

Hope it helps.